London's Tower Bridge illuminated at dusk.

Record Low Fares in the Air But How Long Will They Last?

24 January 2017

Aussies are cashing in on a golden era of travel fuelled by rock-bottom international airfares.

The price wars that are currently under way are delivering some of the cheapest fares ever seen and are encouraging Australians to take off overseas in record numbers.

For example, travellers can snap up return fares from Sydney to London for little more than $1,000 – less than a week’s wage for the average Australian worker – while fares to destinations such as Hawaii, LA and New York are available for a fraction of the prices that Aussies have become accustomed to paying historically.

Hanauma Bay on the island of Oahu. Hit Hawaii’s beaches for less as price wars slash airfares.

Other eye-catching deals are being released at Flight Centre’s Travel Expos, which are now under way throughout Australia.

But how long will the good times last? Is it ever going to be this good again in terms of airfare pricing?

“It’s impossible to know how long the discounting will continue, so it makes sense to lock in a deal if you see an attractive offer,” Greg Parker, the head of the Flight Centre Travel Group's air business said.

“Over the past 12 months, we have seen unprecedented discounting on international routes,” Parker said.

“This discounting has been driven by intense competition between the airlines and also by reasonably rapid growth in capacity in and out of Australia since the start of the 2016 calendar year.

“While this growth in capacity has coincided with solid growth in outbound travel, the increase in seat numbers has been larger than the increase in passenger numbers, which means there’s also more empty seats – or lower load factors – for airlines.

“For the traveller, it’s been a perfect storm. As load factors start to improve, prices will probably start to creep up because current levels are unlikely to be unsustainable for airlines in the longer term.

“It’s certainly possible that this scenario will arise again at some point in the future, but the discounting will probably be more of a short-term strategy to stimulate demand.”

Passengers looked relaxed on a plane. With lower load factors, there’s plenty of room to stretch out.

Flight Centre Travel Group managing director Graham ‘Skroo’ Turner expects fares to remain extremely affordable, but believes headline fares may increase modestly in the medium term.

“Twelve months ago, we said fares would probably never be cheaper,” he said.

“Clearly, we were wrong. Historically, we have grown accustomed to flights becoming more affordable every year – prices tend to stay fairly stable, while average wages tend to increase – but the last 12 months have been different in that we have seen significant price deflation.

“As a result, fares to most of the hottest destinations for Australian travellers have been below or near record low levels.

“In the near term, we expect prices to remain fairly stable, rather than continuing to fall.

“We don't believe there will be any significant increases unless demand and load factors increase rapidly.

“You may see some more of the eye-catching deals we have seen recently from time to time but these are likely to be short-term initiatives from particular airlines to grab market-share, rather than further discounting across the board.”

A plane takes off with city lights glowing golden in the background. Make the most of this golden era of travel.

Flight Centre has described the current trading climate as a golden era of travel, characterised by:

  • Cheap airfares.
  • More choice.
  • Improved in-flight experiences as flights become more direct and as airlines enhance their on-board offerings.

Travellers are taking advantage, with the latest outbound travel data from the Australian Bureau of Statistics showing that outbound departures increased more than 5 per cent for the period between July and November 2016, compared with the same period in 2015.

So how can you find the best deals?

Tom Walley, the head of Flight Centre Travel Group’s Australian leisure travel business, also recommends that travellers lock in attractively priced fares as soon as they see them.

“There will be a limited number of seats available at the cheapest prices and these will typically sell out first,” he said.

“For this reason, it’s best to lock them in as soon as you can. It’s worth signing up to receive email alerts, so you hear about these deals when they are hot off the press.

“You can also take steps to ensure you are not disadvantaged if the price of your fare unexpectedly drops by utilising the Price Drop Protection that is included in Flight Centre’s International Airfare Packages.

“When it comes to travel dates, it often pays to be flexible. For example, your travel agent may be able to find you a cheaper fare if you travel to a holiday hot spot midweek, rather than on a Friday or Saturday, when demand will typically be higher.”

* Featured image: London’s calling with low airfares – see Tower Bridge illuminated at dusk.


Visit your local Flight Centre store or call 131 600 for more advice and the latest deals.


 

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