Domestic airfares up in October

written by australianaviation.com.au | October 19, 2017
Australia's domestic carriers at Sydney Airport. (Seth Jaworski)
Australia’s domestic carriers at Sydney Airport. (Seth Jaworski)

There was an across-the-board increase in Australian domestic airfares in October, whether travellers were buying business or economy class tickets, new figures show.

The Bureau of Infrastructure, Transport and Regional Economics (BITRE) monthly measure of airfares showed the largest increase was in the restricted economy category, which was at 83.3 index points in October, up 3.7 index points from 79.6 a year earlier.

Restricted economy is at the highest level since a change to the index in June 2011, when Virgin Australia and Jetstar introduced simplified fare structures that brought down the cost of so-called flexible tickets.

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Meanwhile, the BITRE measure of domestic business class airfares was at 95.1 index points in October, up from 93.9 points a year earlier.

And the best discount economy category was also higher than a year ago at 64.1 points, compared with 61.6 in October 2016.

The BITRE air fare series is a price index of the lowest available fare in each fare class, weighted over selected routes.

Figures from an International Air Transport Association (IATA) report showed the Australian domestic market continued be stagnant, with airlines cutting capacity in an effort to better match demand with the number of seats in the market.

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The IATA Economics Report said demand, measured by revenue passenger kilometres (RPK) fell 0.3 per cent in the eight months to August, compared with the prior corresponding period.

Capacity, measured by available seat kilometres (ASK), fell 2.2 per cent. As a result average load factors improved 1.5 percentage points to 77.6 per cent.

“RPKs have been trending sideways in seasonally adjusted terms over the past year or so, although domestic capacity has trended down over the same period at an annualized pace of around two per cent since late 2016,” the IATA Economics report said.

Qantas chief executive Alan Joyce told reporters the company’s 2016/17 results presentation the encouraging signs that emerged in the domestic market during the latter part of the previous financial year had continued into 2017/18.

“The domestic market continues to perform very well and we expect that to continue,” Joyce said.

“We are seeing strength in every sector apart from resources.”

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5 Comments

  • Adrian P

    says:

    The Australian domestic market continued be stagnant but continues to perform very well and we expect that to continue.
    So cutting supply to maintain prices is the way forward.
    Remember AGL were accused of this for wanting to close an inefficient coal power station.

    Good for the Australian economy, for it to be cheaper to fly Singapore for a holiday than a domestic destination.

  • deano

    says:

    Adrian
    I don’t see how it is good for OUR economy to be able to holiday overseas rather than in Australia….

    Seems to me like we are back to the old days of the 2 airline agreement and higher fares
    Both Qantas and Virgin run LCCs that have very few seats at rock bottom prices and are regularly $10-$20 a seat cheaper than their parents fares
    Any new upstart will be that wants to be a true LCC will be aggressively competed with until they fold (Compas 1&2) or simply bought out by VA or QF (Tiger & Impulse)

    This duopoly we have is ripping the consumer now that they collude to reduce capacity to fill planes and drive up prices, only to squander their profits trying to compete on international routes

    The ACCC should look closely at both airlines…..

  • Steve

    says:

    Are you kidding Deano? Tiger is relatively never only $10 cheaper than Virgin and neither is Jetstar to Qantas.

    Virgin hasn’t made money for years and all it will take if one of their backers to pullout and Aus will be left with qf and jq only. Involve the ACCC?

  • Craigy

    says:

    @ Deano You can’t be serious. Domestic airfares are so cheap now compared to the past. Perhaps you should take the time to read Geoffrey Thomas’s article in last months Aus Aviation and previous articles on the same subject in previous editions.

  • deano

    says:

    Well I can pick up a flight from London to Paris for $53 Euro return or about $80 AUD
    This gets you 1 leg on Tiger or Jetstar for roughly the same flight time
    Or in other words about twice the price

    Ho does Easyjet do it for this price, but it costs us double?
    Same plane
    Same seating
    Same fuel costs
    Same service
    Perhaps higher staffing costs in Aus

    Assuming 180 full our planes are earning $7,200.00 per sector more than Easyjet at the lowest price or over a year @ 5 sectors per day $13 million more!!!!!!!!!!

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