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Domestic airfares finally come down after record prices

written by Adam Thorn | January 12, 2023

Domestic airfares appear to be finally coming down after months of record prices.

According to new BITRE data released by the Department of Transport, the ‘best discount’ airfare index dropped from 112 in December to 74.5 in January — its lowest since August. The traditional ‘restricted economy’ index has also significantly dropped from 90.6 to 82 month to month.

The numbers suggest airlines are beginning to release more sales tickets to entice passengers to book flights post-Christmas.

Airfares are currently expensive due to a combination of high fuel prices and the industry holding resources in reserve to mitigate delays caused by staff shortages.


However, strong pent-up demand caused by three years of COVID-19 restrictions means airlines have felt little need to release bargain deals.

The numbers back up analysis from the ACCC, which said it would be keeping a close eye on airlines to ensure they lower prices after the busy holiday period.

It added it’s “expecting” prices to go down this year when more employees are recruited.

“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.

“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.”

The high airfares come at the same time as domestic flights are packed to the highest levels since records began, and airlines are predicting bumper profits.

Qantas revealed it would target an underlying profit of up to $1.45 billion for the first half of the financial year; Rex’s capital city 737 flights generated a $2.8 million profit in November; while Virgin has declared it had returned to real profitability for the first time since its damaging ‘capacity wars’ battle with Qantas a decade ago.

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