Average Price of Domestic Fares in Australia Has Dropped in Q1 2016

25th Apr 2016

Last year, Australian airlines could enjoy the fact that the demand was strong, which led to domestic airfares going up by between 8 and 9 per cent. However, this year, the situation is not so peachy and the average fare price has dropped by 5.77 per cent.

This was revealed in the latest Australian aviation and airfare analysis report by CAPA and 4th Dimension, which also shows that the decision by two of the biggest airlines in Australia, Qantas and Virgin Australia, to limit capacity additions in 2015 paid dividends in the form of higher fares.

Speaking about this, general manager at 4th Dimension Virginia Fitzpatrick said:

"We are now seeking cheap fares available right up to five and three days prior to departure."

For business travellers, who prefer to book closer to the travel date, the price of average ticket, one-way rose to $176.20 or by 8.1 per cent. On the other hand, for leisure travelers the price went up to $147.10 or by 9.4 per cent.

When it comes to routes, those traveling between Sydney and Canberra saw the biggest change, as their airfares went up by 22 per cent. On the other side of the spectrum, Sydney-Perth fares were 3.5 per cent higher.

This allowed Virgin Australia to increase its airfares by 12.5 per cent and Qantas to do the same by 7.4 per cent.

In 2016 the demand from travellers has softened, leading to Qantas adding less capacity than it previously planned. Qantas Domestic Chief Executive Officer Andrew David, however, believes the lower demand won't last long.

Mr David said:

"We can see no signs that the underlying health of the economy has changed. I don't think it is much different from what we have seen in previous elections. It is good we now have a date. There is no doubt during an election period there is mixed consumer sentiment and things will get deferred until after the election."

CAPA Executive Chairman Peter Harbison said:

"We have had fairly strong demand up until now. What we are seeking now is people being more careful about where they spend. Once you start to push up fares at the bottom end of the market, that price sensitive stuff stops traveling very quickly. There is the economy but the fact fares have gone up must have some impact on that equation."