More seats, cheaper fuel cut airfare costs for Aussies

Perth Now

27-05-2025

Cheaper jet fuel and more seat availability have driven down prices for Australian jetsetters and the price relief is expected to continue.
Domestic economy airfares were 12 per cent cheaper in the first two months of 2025 than the same time last year, data compiled by corporate travel advisers FCM Consulting shows.
That represents $29 off the average ticket price.
The price drop comes despite the Australian Competition and Consumer Commission claiming limited domestic competition was helping the country's dominant airline groups - Qantas and Virgin - boost their profit margins.
While Qantas Group earnings before tax soared to $1.5 billion in the last six months of 2024, and Virgin Australia also announced record profits, market dynamics since the new year have benefited travellers.
Globally, jet fuel is down almost 17 per cent compared to the 2024 average, driven in part by economic uncertainty from Donald Trump's trade war curtailing demand for oil.
Fuel is the largest operating cost for airlines, so fluctuations flow through to airfares.
Ongoing weakness in jet fuel prices will continue to put downward pressure on airfares in coming months, the ACCC predicts.
FCM Consulting director Felicity Burke said Australia and the broader Asia-Pacific region had experienced sharper drops in fares compared to the rest of the world.
"We've been saying for a long time now that global capacity increases and other factors like jet barrel cost reductions would go hand-in-hand with airfare price drops in various regions, and this is one of several reasons that we're now seeing this come to fruition," she said.
Airfares for the "golden triangle" route between Melbourne, Sydney and Brisbane remained fairly flat - a consequence of higher demand resulting in the fewest spare seats between the major capitals.
Prices shot up post-COVID as airlines struggled to keep up with a sharp rebound in demand but have moderated as more seats were brought online.
Global capacity in May was seven per cent higher than 2019 and five per cent higher than the same time last year.
International economy airfares out of Australia dropped five per cent in January and February compared to the same period last year, while business class tickets fell three per cent.
More routes are set to launch in the second half of this year, with Virgin's partnership with Qatar Airways adding further competition on the highly-trafficked Australia to Europe corridor.
"Through this partnership with a world-leading global airline, we expect to not only create more choice for travellers but also drive healthy competition, which typically helps to place downward pressure on fares over time," a Virgin Australia spokesperson said.
Qantas will also launch new routes in late 2025, including Adelaide to Auckland and Perth to Auckland and Johannesburg.
Cases of tourists being detained and deported by US border security have spooked travellers.
Graham Turner, the chief executive of FCM owner Flight Centre, said leisure travel bookings to the US dropped by up to 15 per cent in the first three months of the year.
But it has had little effect on airfares to the US which fell by about three per cent, largely in line with the rest of the world.