Australian airfares will continue to rise until 2020, even though economic conditions are somewhat uncertain locally and globally. That is the observation of the business travel consulting team of data analytics specialist 4th Dimension in its recently released focus paper ‘Australia Aviation & Airfares’
The report acknowledges that the Australian economy has been slow in the first half of 2019. The full year forecast is set to range an average of +2.2%, with longer term growth to increase to +2.75%/3% in 2020 and 2021. “Since Oct-2018, the domestic travel industry has been impacted by lower discretionary household spending. In response, both airlines and hotels are shifting their strategies to stimulate growth and maintain market share,” it says.
The detailed paper delivers benchmarking analysis of Australia’s domestic market, the Trans-Tasman market and international services out of the country (down to a city pair level) based on tickets purchased through Flight Centre Travel Group’s (FCTG) retail-leisure and corporate travel businesses. This represents around 35% of Australia’s retail travel sector and approximately 27% of the corporate travel sector, delivering a solid, but not exhaustive snapshot into fare trending.
It discovered that domestic economy class purchase fares rose 7% in the corporate sector and 8% in the leisure sector in 2018 and indicates that corporate purchase fares will increase +6% and leisure fares +4% over the next 12 months provided fuel remains stable and the economic conditions remain largely unchanged.
The report highlights the movement of monthly (purchase) fares for domestic and Trans-Tasman travel in 2018. Across key routes, purchase price increases were reported for economy class fares on domestic (+AUD14) and Trans-Tasman (+AUD49) for corporate travellers. However, there was a fall in international economy class fares for corporates with a -AUD16 average purchase fare reduction on key routes.
Whilst 2018 saw increases for the corporate sector, it says leisure travellers continued to purchase fares significantly cheaper by taking advantage of advance purchase fares, fixed travel plans and accessing flash-sales from airlines. The analysis shows leisure travellers purchased domestic economy class fares AUD34 cheaper than corporate travellers rising to AUD158 cheaper across the Trans-Tasman.
The report highlights that the airfare data indicates that travellers in Australia saw significant increases in domestic fares in the mid-range fare classes, which are traditionally purchased by corporate travellers booking between seven and ten days in advance.