Thursday 8 September 2022

Why are domestic airfares so expensive here in Australia

Australian travellers are being pummelled by ticket prices hitting an almost two-year high – and the trend is expected to last until at least October, suggests a new analysis by the Australian Competition and Consumer Commission (ACCC).

The pricing watchdog’s quarterly Airline Competition in Australia report shows the cheapest economy class airfares were 56% higher in August this year compared to just four months prior, when they sank to an 11-year low.

That spike was driven by simultaneous increases in fuel prices, ongoing staff shortages and high demand, even as airlines cut the number of flights to trim capacity by reducing the number of seats in the sky.

As a result, Qantas, Virgin Australia and Rex are offering fewer seats at the cheapest economy rates and more seats at higher prices, says the ACCC.

The ACCC price comparison also found business class airfares rose by around 17% in the three-month period between June and August 2022.

“In these circumstances, more than ever, the level of competition between airlines is incredibly important to maintain pressure on ticket prices and service levels across the industry,” ACCC Chair Gina Cass-Gottlieb noted.

The ACCC says pent-up up demand for leisure travel, “particularly from people in the colder southern states”, continues to drive the recovery in passenger numbers.

“Demand on routes between Canberra, Melbourne and Sydney has lagged behind, in part due to the slower recovery of corporate and business travel.”

And Virgin Australia is making the most of the changed market dynamics and its relaunch into the middle of the field by delivering corporate economy airfares at consistently two-thirds the price of Qantas on Australia’s key domestic capital city routes.

As reported by travel industry newsletter Travel Daily, an independent analysis of airfares on the ‘golden triangle’ routes between Brisbane, Sydney and Melbourne found Virgin maintaining a 34% price advantage over Qantas in economy, with business class fares a staggering 56% cheaper.

Meanwhile the average intercity jet fares of Rex sit “bang in the middle” between those of Qantas and Virgin Australia, observed corporate travel industry consultant Tony O’Connor from Butler Caroye.





Story sourced from here

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