The chief executive of Canberra Airport has said passengers “won’t put up” with high airfares for much longer.
Speaking to the AFR, Stephen Byron predicted prices would come down on domestic routes and argued airlines “can’t keep charging double what they used to charge”.
“On international, Australia is re-engaging with the rest of the world, but it might take six months for the crazy international airfares to come back down,” he said. “We expect direct international services to return to Canberra in 2023, and, ultimately, this will lower fares.”
Airfares are currently at record levels due to a combination of high fuel prices, strong demand, and, crucially, the industry holding resources in reserve to mitigate delays caused by staff shortages.
The newspaper interviewed a number of the biggest names in the industry to ask when they predicted fares would finally come down.
Virgin CEO, Jayne Hrdlicka, admitted it was “difficult to accurately predict” given the range of factors influencing costs, while Jetstar CEO, Stephanie Tully, said the “big unknown” was how the war in Ukraine would continue to affect the coast of oil.
However, Perth Airport CEO, Kate Holsgrove, predicted the huge pent-up demand for travel would eventually soften and airline capacity would return at “some point” in 2023.
Earlier this month, Australian Aviation reported how the ACCC warned it would be keeping a close eye on airlines to ensure they lower prices after the busy Christmas period.
“The ACCC will be monitoring the domestic airlines closely to ensure they return capacity to the market in a timely manner to bring downward pressure on airfares,” it said in its latest quarterly report on aviation,” it said.
“In this context, the ACCC would be concerned if the airlines withheld capacity in order to keep airfares high.
“Airfares are higher than they have been in years and higher than pre-pandemic levels. The average revenue per passenger, an indication of average airfares across all fare types, was 27 per cent higher in October 2022 than it was in October 2019.
“Of the different fare types, the discount economy fares are particularly high because airlines don’t need to offer sales in order to fill their planes. The discounted tickets that are made available are sold out quickly.
“An index of the discount economy fares across Australia’s top 70 domestic routes in November 2022 was more than double what it was in April 2022, when it hit an 11-year low.
“Flexible economy and business airfares have not increased as much as discount fares, and in November 2022 remained below pre-COVID-19 prices.”
Fuelling the increase the most is the almost total lack of cheap domestic sale tickets.
According to BITRE data released by the Department of Transport, the ‘best discount’ airfare index is at 112 for December despite being at just 48 in April.
The number is even higher than the 106 recorded in September, itself the worst in 15 years.