Why is it cheaper from UK than From Aus?

[WillBlack]

It is about $500 cheaper for return flights UK-Aus-UK than Aus-UK-Aus using the same airline, equivalent national airlines or the cheapest at each departure.

Why is that. (Sorry if already discussed; please point me to the right thread.)

Using: SYD & LHR $2.03 / £1.00

and national airlines:
Qantas: Sydney - London - Sydney; 2009-Oct-27 - 2009-Nov-27; $2069
Qantas: London - Sydney - London; 2009-Oct-27 - 2009-Nov-27; $1539 (£758)

BA: Sydney - London - Sydney; 2009-Oct-27 - 2009-Nov-27; $2,070
BA: London - Sydney - London; 2009-Oct-27 - 2009-Nov-27; $1640 (£807.70)

the cheapest:
www cheapflights com au
www cheapflights co uk
(links not allowed here for new members as an anti-spam measure)

Why is it ~$500 cheaper from the UK?

 

[straitman]

WillBlack,

Welcome to AFF.

I suggest you use the search function above and type in what you want. It has been covered a few times. I just had a look and there are several threads that have some information but I guess it's up to you just which bits you want.

 

[WillBlack]

WillBlack,

Welcome to AFF.

I suggest you use the search function above and type in what you want. It has been covered a few times. I just had a look and there are several threads that have some information but I guess it's up to you just which bits you want.

Thanks.

I tried the search function before creating the thread but did not find a thread which explained the difference in price.

I may be using inappropriate search terms. Could you suggest search terms please?

 

[Dave Noble]

The simple reason is "because they can" .

The market in the UK is different to Australia plus , ime, people in UK are much less fussed about which carrier they take and more focused on price which stops the local airlines just charging extra on the approach that people will use them regardless

There is another thing to consider is that exchange rates fluctuate and although the difference may be $500 at the moment when the ROE of AUD:GBP is 1:0.49 which is pretty strong for AUD. If it returned to a more typical (ime) 1:0.45 , the difference would reduce by about $100

Dave

 

[samh004]

I'd imagine it has to do with GST, VAT and just that it's a different country, a different system. Likewise, flights from Hong Kong to either destination are really cheap.

Not sure if that was what straitman was getting to. But similar to what Dave was saying.

 

[WillBlack]

The simple reason is "because they can" .

The market in the UK is different to Australia plus , ime, people in UK are much less fussed about which carrier they take and more focused on price which stops the local airlines just charging extra on the approach that people will use them regardless

There is another thing to consider is that exchange rates fluctuate and although the difference may be $500 at the moment when the ROE of AUD:GBP is 1:0.49 which is pretty strong for AUD. If it returned to a more typical (ime) 1:0.45 , the difference would reduce by about $100

Dave

"If they can they will", I agree. Perhaps QA and BA share similar pricing.

You suggest exchange rates as part explanation. I imagine that airlines heavily hedge their currency exposures. But has not the difference persisted for many years?

I have heard explanations that some sectors are busier and more profitable than others. But surely competition would see capacity expand in the more profitable sectors?

It appears that the UK levies no taxes on airline fuel, Aus tax being $0.02854 / litre; hardly enough to explain the difference in price.

I can not readily find an explanation in ground charges. Nor do head / tail winds offer a significant explanation.

What causes the most significant part of the price difference?

 

[oz_mark]

"If they can they will", I agree. Perhaps QA and BA share similar pricing.


What causes the most significant part of the price difference?

You answered the question yourself. Pricing is reflective of what the market will bear.

 

[WillBlack]

You answered the question yourself. Pricing is reflective of what the market will bear.

I don't see how this explains the failure of cheaper airlines to equalize the price even if the majors conspire to maintain the difference. The service UK-Aus-UK requires the same resources as the Aus-UK-Aus service but there exists a ~$500 difference.

How come there is the same ~$500 difference between with cheapest offers in the UK and the cheapest offers in Aus, not just for the same airline, not just the national airlines?

Are all airlines conspiring to maintain the difference or is it something else?

 

[Arthur Hodgson]

There is another thing to consider is that exchange rates fluctuate and although the difference may be $500 at the moment when the ROE of AUD:GBP is 1:0.49 which is pretty strong for AUD.

Dave

I think you might mean the GBP is very weak rather than the AUD is strong.

Also, I don't consider the AUD-USD exchange rate of 0.72 to be "pretty strong", and what about the JPY?

But I am willing to stand corrected.

 

[Dave Noble]

I think you might mean the GBP is very weak rather than the AUD is strong.

Also, I don't consider the AUD-USD exchange rate of 0.72 to be "pretty strong", and what about the JPY?

But I am willing to stand corrected.

The AUD-USD conversion is irrelevent to whether it is strong against the GBP. If the GBP is weak against the AUD, then logically the AUD is strong against the GBP

Dave

 

[Dave Noble]

I'd imagine it has to do with GST, VAT and just that it's a different country, a different system. Likewise, flights from Hong Kong to either destination are really cheap.

Not sure if that was what straitman was getting to. But similar to what Dave was saying.

Nothing to go with GST/VAT . Neither VAT is applied to travel ( domestic or international) in the UK nor is GST levied for international travel from Australia.

The fares are cheaper because the market is more competitve

Dave

 

[Cabbage]

The fares are cheaper because the market is more competitve

Dave

Surely an argument for full liberalisation of air routes to/from Australia? IMHO, Qantas' level of influence on Government policy in Australia is excessive, and actually quite disturbing.

If I had my way:

1) Chairmans lounge for all politicians would be banned
2) All pollies forced to take BFOD, regardless of carrier
3) Frequent Flyer points strictly not issued for government related travel flights for all pollies, in exchange for cheaper flights
4) Political donations from all companies are banned

I won't be holding my breath however. Not when the likes of David Epstein (former Chief of Staff to Kevin Rudd) is Qantas' Head of Government Affairs, and Qantas continues to make donations to the two major political parties.

 

[WillBlack]

Why is it ~$500 cheaper from the UK?

From "Similar Threads" at the bottom of this page:

"I found flights to be around $500 cheaper return to Vancouver all year round."
Cheaper to book from O/S site?
www#frequentflyer#com#au/community/qantas-frequent-flyer-program/cheaper-book-o-s-site-13966;html

(link de-anti-spammed)

Ok, but Why?

 

[WillBlack]

The fares are cheaper because the market is more competitve

Dave

If it were to do with "competition" then why is the same ~$500 difference found between the cheapest offers in the UK and the cheapest offers in Aus (ignoring the major airplines)?

If it were about "competition" then would not these minor airlines compete amongst each other to the point where the difference dissapears?

 

[NM]

If it were to do with "competition" then why is the same ~$500 difference found between the cheapest offers in the UK and the cheapest offers in Aus (ignoring the major airplines)?

If it were about "competition" then would not these minor airlines compete amongst each other to the point where the difference dissapears?

Its not just the direct competition between the airlines that is at play. There are exactly the same number of airlines and flights AUS-UK and there are UK-AUS. The difference is in how the market operates.

Many Australians, rightly or wrongly, tend towards Qantas first when looking to travel overseas. They may compare prices with some major, well known airlines such as SQ, CX, BA. But many Australians don't even consider the 15 or so other airlines that can sell them a ticket for the same route, some of which may not even be operating the aircraft on some of the sectors.

The market often operates very differently in Europe and the UK. Potential customers will consider all flight options when looking for the bets deal. This approach has been established as Uk folks regularly seek cheap options for their summer sunburn sessions in France, Spain etc where they treat the flight like a bus ride to their holiday destination.

So while the products available may be the same, the "competition" is different in that the markets behave differently. Its not a matter of more competition from the UK, but a matter of a different market environment.

Airlines selling fares SYD-LON return include China Airlines, Malaysian, Jet Airways, Air France, KLM, Finnair, Aeroflot, Swiss, Gulf Air, Turkish Airlines, Royal Jordanian, Austrian Airlines, Qatar Airlines, Royal Brunei Airlines, SAS, Malaysian Airlines, Etihad, Virgin Atlantic, British Airways, Qantas, Air Mauritius, South African Airways, Alitalia, Emirates, Aerolineas Argintinas, Air New Zealand, Eva Air, Korean Airlines ...

And that is before looking at the true LCC options such as Air AsiaX or combinations of LCCs on separate tickets.

So there is plenty of competition between airlines selling fares on the route. Qantas has an advantage for sales ex-Australia in that many Australian passengers are willing to pay more to travel with Qantas - whether through patriotism or ignorance. While people purchasing in the UK may be more familiar with more of the airlines mentioned above and more likely to give them a go.

Picking some random dates June and looking at published fares via ExpertFlyer I note that the cheapest SYD-LON-SYD is A$1200 on China Airlines (fare basis SCR3MEU). Not a bad price.

And the cheapest LON-SYD-LON is GBP297 on Etihad (fare basis QSP6MGB). A real bargain at around A$617.

 

[oz_mark]

Nothing to go with GST/VAT . Neither VAT is applied to travel ( domestic or international) in the UK nor is GST levied for international travel from Australia.

The fares are cheaper because the market is more competitve

Dave

Competetion is the same either way. The problem is that Australian consumers are more ignorant of the competition than those in the UK. As a result it is possible to charge higher prices from Australia.

 

[NM]

Competetion is the same either way. The problem is that Australian consumers are more ignorant of the competition than those in the UK. As a result it is possible to charge higher prices from Australia.

And remember they use more fuel flying "up" to the UK than flying "down" to Australia

 

[auriga]

Maybe the price needs to be lower in the UK, in order to tempt people to come to Oz? :mrgreen:

 

[fortymilliondaggers]

Maybe there's more choice of destinations from the UK, many of which don't require 24 hours in the air, which means for flights to Australia to be competitive at all, they need to be cheaper.

 

[straitman]

Maybe the price needs to be lower in the UK, in order to tempt people to come to Oz? :mrgreen:

I would have thought precisely the opposite :!: