Yahoo Finance Is now a good time to buy cheap flights?
With the government introducing an international travel ban amid the coronavirus pandemic, many Aussies might be wondering what will happen to their travel plans scheduled for later this year, or whether they should be purchasing flights for future trips as prices plummet.
But according to Centre for Aviation (CAPA) chairman, Peter Harbison, you may be better off waiting until the dust has settled.
“Given we have no idea when things are going to improve, it’s a difficult call,” Harbison told Yahoo Finance.
“There will be less competition when we emerge from the tunnel, so prices will maybe initially be cheapish, to encourage people to fly again, but then go up because the market is less competitive,” he said.
Also read: Airlines to get $715m bailout package
Also read: Qantas grounds 90% of international fleet
Also read: Qantas chief rejects his own salary as coronavirus cripples airline
But if you purchased flights now or in the recent weeks, most airlines have introduced new cancellation policies.
“In the present environment, airlines are being very generous with cancellation conditions because they are anxious to generate some cash flow now,” Harbison said.
SkyScanner data shows flight prices have plummeted as much as 18 per cent on flights between Sydney and Los Angeles, 5 per cent on flights between Sydney and New York and 1 per cent on flights between Sydney and London this March compared with March 2019.
In contrast, flights from Sydney to Beijing have skyrocketed 38 per cent and 16 per cent from Sydney to Shanghai in the same timeframe.
SkyScanner said the uncertainty surrounding the virus meant they could not predict how prices might change after the fact.
“Flight and accommodation pricing is dynamic so it is difficult to predict how prices might change in the future as the market continues to balance many factors at play,” a spokesperson told Yahoo Finance.
Jetstar, Qantas, Virgin coronavirus cancellations
Most airlines have revised their cancellation and change of flight policies in light of the coronavirus outbreak.
Qantas and Jetstar have announced customers with bookings on any domestic or international flight until May 31, who no longer wish to travel, can cancel their flight and retain the value of the booking as a travel credit voucher. This needs to be processed by March 31.
Virgin Australia and Tigerair Australia are waiving change fees for domestic and international bookings fortravel up until June 30, 2020.
This includes changes to dates and destinations, with a maximum of one change per domestic booking. Payment will be required for any fare difference or applicable taxes.
Aviation industry buckles
The aviation industry continues to face multiple challenges despite being thrown a $715 million lifeline.
“The bailout was underwhelming and much more will be needed to keep our connectivity alive,” Harbison said.
The CAPA’s outlook is that the majority of the world’s airlines could be bankrupt by May.
“As the impact of the coronavirus and multiple government travel reactions sweep through our world, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants,” the CAPA stated.
Harbison said airlines’ cash reserves are running down quickly as flights continue to be grounded.
“Forward bookings are far outweighed by cancellations and each time there is a new government recommendation, it is to discourage flying.”
Qantas chief Alan Joyce said the virus is the “worst crisis” the aviation industry has gone through, more so than the global financial crisis, after he chose his salary up until the end of this financial year (June). Last year Joyce earned $24 million including bonuses.
Virgin Atlantic chief Shai Weiss reduced his pay by 20 per cent as the airline continues to battle the tough conditions, while Emirates and Dubai National Air Transport Association presidents Tim Clark and Gary Chapman have taken a 100 per cent pay cut.
With such a grim outlook, Australians wanting to catch a bargain should wait to book flights when international travel resumes to see which airlines are still standing.
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