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Australian domestic airfares fall in July

written by australianaviation.com.au | July 12, 2019
Australia's domestic carriers at Sydney Airport. (Seth Jaworski)
Australian domestic airfares are falling amid challenging market conditions. (Seth Jaworski)

Australian domestic airfares were down again in July to rack up the biggest annual fall in six years, figures from the Bureau of Infrastructure, Transport and Regional Economics (BITRE) show.

The BITRE monthly survey of domestic ticket prices appear to confirm recent comments from major airlines that conditions in the local market are soft.

The index of business class fares compiled by BITRE fell by 0.2 per cent in July, the fourth consecutive monthly drop, to be down by 10.0 per cent from July 2018 and by 11.6 per cent from the peak recorded in June 2011.

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The last time business class fares recorded such a large annual fall was in February 2013, when the BITRE index dropped by 11 per cent, capping off a two-year fall of 33 per cent spurred by competition, easing oil prices, a slowing economy and a strong Australian dollar.

BITRE’s inflation-adjusted index of business fares fell by 0.5 per cent in July the fifth drop in a row, to be down by 11 per cent over the year and by 24 per cent from the all-time high in the series stretching back three months short of 27 years.

The high point was set in October 2008, the year investment bank Lehman Brothers collapsed and sent the world’s financial markets into turmoil and the world economy into recession.

BITRE’s index of “best discount” economy airfares fell by 5.7 per cent in the month after a 15.1 per cent jump in June to be down by 1.4 per cent over the year. The 12-month average of this wildly volatile index rose by 1.6 per cent in July but was down by 1.5 per cent from a year before.

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In real (inflation-adjusted) terms, the best discount index was down by 6.0 per cent in July and by 2.5 per cent from 12 months earlier.

The index of restricted economy airfares, a much more stable indicator, was barely changed in July with a fall of 0.1 per cent, or 0.4 per cent after adjustment for BITRE’s estimate of consumer prices.

(The official consumer price index data for the April-June and July -September quarters are not available yet, so BITRE extrapolates from available data.)

Over the past year, restricted economy fares have risen by 4.8 per cent in current dollar terms, and by 3.6 per cent in real, or inflation-adjusted terms.

The weakness in business fares is in line with comments in May from Qantas. The airline’s group chief executive Alan Joyce said in a trading update that Qantas had seen softness extending into May and June for parts of the domestic corporate market, notably financial services, telecommunications and parts of construction, as well as small businesses.

Those concerns were echoed by Virgin Australia in its own trading update later in May, which described conditions as “challenging” and flagged an annual loss for 2018/19.

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

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Australian domestic airfares fall in July Comment

  • David

    says:

    have a look at international airfares. Constant special return fares to EU from east coast for $1000 or less return. Constant special return fares to LAX or SFO from our east coast for $750.

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