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Domestic airfares hit lowest point since 2012

written by Hannah Dowling | October 14, 2021
Virgin and Qantas 737s sit side-by-side, as shot by Victor Pody

Australia’s economy domestic airfares have reached their lowest level since 2012, as airlines release a slew of cheap tickets to lure in customers despite ongoing border restrictions.

According to the Bureau of Infrastructure and Transport Research Economics (BITRE), its monthly airfare index for economy domestic travel hit 69.9 in October, the lowest point on record since November 2012.

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.

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

The data shows economy fares have dropped over 35 per cent in the year since October 2020 – at which time Australia was benefitting from a brief reprieve in major border restrictions and COVID outbreaks.

The data is the likely result of Australia’s domestic carriers introducing a slew of discounted tickets to drum up demand, as well as dramatically increasing their networks outside of the current outbreak epicentres of Sydney and Melbourne.

Last month, Qantas, Jetstar and Virgin all announced major sales banking on the impending reopening of state borders with NSW and Victoria, while Virgin in August announced the addition of 10,000 new seats across two new routes, which skirt the border closures that currently impact the country’s most populous states.

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Virgin announced that from September, it would begin performing direct flights between Adelaide and Launceston for the first time, as well as reintroduce direct flights between Adelaide and Darwin.

Meanwhile, Qantas also announced that from September, it would rival Virgin on flights between Brisbane and the Whitsunday Coast, launching 14 new flights on the route per week, cashing in on the growing demand for intrastate leisure travel in Queensland due to hard borders.

Business class fares also hit a new all-time low in October of 44.5, falling from its previous record-low of 46.8, reported in August.

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.

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.

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.

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