Yahoo Finance Domestic airfares soar as airlines cut Aussie flights
Domestic airfares saw a significant spike between April and August this year as airlines reduced capacity to manage staff shortages and rising jet fuel costs, the Australian Competition & Consumer Commission (ACCC) has revealed.
In its quarterly report, the ACCC said the cheapest economy airfares rose 56 per cent in August 2022 compared to April this year, when they hit an 11-year low.
Business airfares, on the other hand, saw a 17 per cent increase between June and August, the report showed.
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ACCC chair Gina Cass-Gottlieb said discount economy fares last month were at their highest point in almost two years.
"After about 18 months of historically low airfares, the cost of domestic flying has risen sharply in response to strong demand, temporary capacity reductions and very high jet fuel prices," she said.
"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."
Pent-up demand
About 4.7 million passengers flew domestically in July 2022 – the highest number since the start of the COVID-19 pandemic, and 89 per cent of the passenger volume in July 2019, the report said.
The report also stated that the number of domestic passengers in June 2022 was 97 per cent of the number of passengers in the same month in 2019.
In July, which is a peak time for travel due to school holidays, Queensland emerged as a favourite destination, with the number of passengers flying between Canberra and the Gold Coast almost doubling this year compared to the same month in 2019.
Travel between the Gold Coast, Melbourne and Adelaide also surpassed pre-pandemic demand, the report revealed.
"Pent-up demand for leisure travel, particularly from people in the colder southern states, continues to drive the recovery in passenger numbers," Cass-Gottlieb said.
"Demand on routes between Canberra, Melbourne and Sydney has lagged behind, in part due to the slower recovery of corporate and business travel."
Aviation industry still challenged
The aviation industry, however, is still trying to rebuild its workforce amid strong demand, and is still dealing with high rates of illness, according to the report.
In July 2022, Australia's domestic airline industry reported the worst on-time performance on record, with airlines cancelling flights at a rate more than three times the long-term average.
An earlier government report revealed that only 61.9 per cent of domestic flights arrived on time, while flight cancellations became a common occurrence.
"We are aware that for many consumers, long-awaited travel fell well short of expectations with record delays, very high rates of cancellations, lost baggage, and long wait times for call centres," Cass-Gottlieb said.
"[The ACCC has] been engaging closely with airlines to understand the source of these problems."
Rex leads in punctuality
Rex Airlines, according to the ACCC report, performed significantly better than other airlines in terms of punctuality and cancellation rates, mainly due to the company's decision to keep its staff despite reduced flying over the past two years.
The ACCC report added that the combination of high demand for travel and reduced capacity resulted in fuller flights recently.
In July 2022, 82 per cent of seats were filled, while many routes to northern Australia surpassed 90 per cent, making it difficult for people to find available seats if their initial flight was cancelled.
Market share for Qantas, Virgin and Rex also increased between April and July this year after winning passengers away from Jetstar, the report revealed.
The Qantas-Group-owned Jetstar carried 23 per cent of all domestic passengers in July, down from 28 per cent in April.
Qantas carried 39 per cent of passengers in July, compared to 33 per cent for Virgin and 5 per cent for Rex.
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