Yahoo Finance Qantas reveals $5 billion reason airfares are sky high
Aussies looking to take to the skies over summer will be hit with higher airfares thanks to higher fuel costs and soaring demand, Qantas CEO Alan Joyce revealed.
Speaking to The Sydney Morning Herald, Joyce said higher fuel prices had hit the aviation industry just as they had for commuters.
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“A big driver of the price increase is fuel. We’ve paid $5 billion for fuel this year, which is the biggest fuel bill we’ve ever had,” Joyce said.
“Secondly, demand is bigger than supply. It’s at unbelievable levels internationally and domestically because people were locked up for so long and everybody was surprised at how rapidly demand rebounded to be [in] excess of what it was in 2019.
“And supply is difficult because, like every airline, it’s been hard getting those aircraft back in the air and the combination means that airfares are higher.”
And prices aren't expected to fall anytime soon, with Joyce saying supply chain issues aren’t expected to ease until the end of next year.
Flight prices skyrocket
Domestic airfares had soared well above pre-pandemic levels, the ACCC’s latest Airline Competition in Australia report revealed last week.
The quarterly report found 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.
“Airfares have risen due to strong demand for travel and constrained supply as airlines have scaled back their schedules in response to high jet fuel costs and operational challenges,” ACCC commissioner Anna Brakey said.
The report said domestic airfares had surged the most because there was high demand and fewer flights, so airlines didn't feel inclined to offer special fares to fill seats.
“Historic lows and highs for discount airfares in the same year illustrate how changeable this market has been as the industry recovers from the pandemic,” Brakey said.
“We accept that the airlines are still experiencing some pandemic-related resource challenges, but the ACCC will be monitoring them closely to ensure they return capacity to the market in a timely manner to start easing pressure on airfares.”
“We would be concerned if airlines withheld capacity to keep airfares high.”
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