Domestic business class fares hit record low

The series is a price index of the lowest available fare in each fare class, weighted over selected routes. It does not measure real airline yields, or average fares paid by passengers.

The index has been compiled using flight booking data since 1992, with data from June 2003 representing the base index value of 100.0.

Business fares appeared to enter a freefall in late June 2021, decreasing 25.3 per cent in the space of one month, from 64.4 in June to 48.1 in July. Meanwhile, economy fares have held consistently stable since May.

The drop coincided with the ongoing COVID-19 outbreak, which began in Sydney’s Eastern suburbs, and has since seen half of the Australian population thrown into lockdowns, and most of the country’s domestic borders slammed shut.

In July, Virgin Australia slashed business class fares for bookings made at least four weeks in advance, with one-way tickets on offer for as little as $199 on routes such as Brisbane to Rockhampton or Melbourne to Launceston.

Virgin, which now competes with both Qantas and Rex on popular business routes between major cities, released the sale to drum up demand for future business travel during the prolonged travel lull, which was sparked by national closed borders and saw thousands of flights cancelled.

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The Sydney outbreak resulted in over 9,000 flight cancellations in June alone, making up nearly 25 per cent of all flights for the month, according to BITRE. It was the highest number of cancelled flights recorded in a month since reporting commenced in November 2003.

Also as a result of closed borders, earlier this month Virgin announced the addition of 10,000 new seats across two new routes ahead of the September school holidays, which skirt current border closures that impact the country’s most populous states.

From September, Virgin Australia will fly direct from Adelaide to Launceston for the very first time, as well as re-introduce direct flights between Adelaide and Darwin.

Notably, South Australia, Tasmania and the Northern Territory are currently the only three states without major travel restrictions in place, and people can freely move between these states.

The news will add over 4,000 seats per month between Adelaide and Launceston, with three return services per week, as well as 6,000 seats per month between the South Australia capital and Darwin, with four return services per week.

In June, the newly-reborn Virgin knocked Qantas’ domestic market share down from 74 per cent in December 2020 to 69 per cent in March, according to the ACCC.

The decrease, revealed in the latest ACCC report monitoring network expansion, came alongside Virgin increasing its share from 24 per cent to 28 per cent, with Rex holding steady at 2 per cent.