International airfares lose altitude as new capacity emerges
New data from Flight Centre Travel Group’s flagship Corporate brands, Corporate Traveller and FCM Travel, has revealed average international outbound Economy air fares across all carriers have decreased by 5-10 per cent in the latest quarter, equating to an average saving of more than $100 each way (July - September 2024 vs July - September 2023).
Flight Centre Corporate reported the business cabin class following suit, with Business Class fares decreasing by four per cent, or down by more than $300 during the same period.
Flight Centre Corporate analysed the cost of fares into key destinations, finding the biggest drops into Qatar, UAE and key European countries.
Flight Centre Corporate Global COO Melissa Elf said a gradual decline in international airfares reflected the growing capacity and competition of international carriers out of Australia.
“We’ve seen a year on year drop in average international fares every month for well over a year now, so it’s more than just a trend; this is increasing stability in the travel industry,” Ms Elf said.
“The biggest drops on economy fares in the latest quarter are those into the UAE, Qatar, France, United Kingdom, and Italy.
“These are important routes, particularly for corporate travellers, with the Middle East being a hub for access to the rest of the world.”
The data comes just weeks after the Australian Federal Government concluded negotiations with the UAE for a Free Trade Agreement.
“It’s great news that our governments have recognised the value in trade with the UAE, particularly in the extraction and processing of critical minerals in Australia, along with the developments in our world-leading clean energy technology,” Ms Elf said.
“In the first half of this year, the Middle Eastern and European countries were slower to follow in dropping fare prices, so it’s very encouraging news for travellers that countries like Qatar, UAE, France, Italy and Germany are topping the list over the last quarter.
“All of our key routes have seen steady decreases in the business cabin, with the USA and Italy coming out as the biggest winners, with drops of 10 per cent and eight per cent respectively.”
Despite declining international airfares, the data revealed that domestic fares had seen an increase, with the impacts of Rex Airlines leaving trunk routes and high travel demand over the September holidays being key contributors.
Domestic economy airfares increased in the September quarter this year by 3-5 per cent, compared to the previous year, which was an average $10-20 increase per ticket.
However, the recently announced deal between Virgin Australia and Qatar would see additional capacity and competition added to Australia’s international travel market by mid-2025, if approved.
The partnership would see new connections to Doha from Brisbane, Sydney, Melbourne and Perth, from where 107 new connections would be made to Europe, the Middle East and Africa.
“There is a direct correlation between regions that were adding and welcoming airline capacity and the cost of travel decreasing,” Ms Elf said.
“With demand into Europe, the Middle East, Asia and the US remining high, it’s critical more flights and competition are added, and announcements like that from Virgin and Qatar, once approved, is the kind of thing the industry needs to ensure prices drop even further.
“The deal between Qatar and Virgin Australia would welcome international capacity and it should free up aircraft to better service the domestic market.
“A strong and competitive airline industry is good for everyone, so we’re confident this will mean cheaper fares and more travel destinations for Australians from mid next year.”
Ms Elf said corporate travel was essential for companies to win new business, attend conferences, events, and meetings, and retain staff, and corporates were increasingly growing travel budgets to leverage this.
“Our customers have told us that 40 per cent of businesses plan to increase their travel this financial year, while 42 per cent of customers intend to increase their travel spend,” she said.
