Commsec: Airfares rise to near 3-year highs

[kamchatsky]

Got this from Commsec today in PDF. Here is the extraction:


Point of View: Airfares rise to near 3-year highs

When it comes to airline travel, the key message is to shop
around for the best deals because airfares are creeping higher.
Latest data from the Bureau of Infrastructure, Transport and
Regional Economics reveals full economy airfares are at their
highest in almost three years. Business class fares now cost
more than last year, but discount economy fares are still
cheaper than 12 months ago, even though they have been
trending higher for the last five months.

What does it all mean?

Airlines started raising ticket prices from record lows only
recently, in an effort to claw back shrinking margins. The
decision seems to have worked well for the airlines as airfares
are now subtly rising on a monthly basis. Business class airfares
are now holding at their highest levels in eight months indicating
that demand has picked up in business travel. The latest data
on airfares clearly portrays the incremental improvements that
are taking place in the domestic economy. Interestingly, while
discount airfares have also been rising, the gains have been
much more minimal and remain lower year on year. Thanks to
the stronger Australian dollar airlines can still afford to pass on
some cost savings to price sensitive passengers. The
“smoothed” (13 month average) index of Business airfares is up
3.7% yoy, while restricted economy airfares hit a seven-month
high in October, but were still down 0.4% – airline margins will
be impacted accordingly. Our Transport analyst, Matt Crowe
says: “This data supports our view that conditions are more
favourable for Qantas than Virgin Blue with Corporate and Full
Fare Economy fares performing better than discount fares in the
leisure market. We continue to prefer Qantas over VBA.”
For airline travellers, the bottom line is it pays to shop around as
there is still a good supply of bargains to choose from. There is
still plenty of demand for a discount as well. Interest rate hikes
and rising utility charges have taken some of the fat out of the
household budget and there is still an inherent level of
conservatism being shown by consumers. The recent HIA-RP
Data Residential Land Report reveals that sales fell by 3.6% in
the June quarter. With interest rates on hold for the last few
months there have been signs that consumers are starting to
spend again, but the potential for further interest rate hikes is
likely to keep housing construction activity depressed in the near
term. Reluctance to take on debt is still a key part of the
domestic landscape.

Savanth Sebastian, Economist, CommSec

 

[ethernet]

Probably something in this.
Tiger Airways just ratcheted prices up another $10 on Eastern Boomerang and this is on top of $25/$50 baggage fees plus $7.50 for CC. (and the noserve $20 web checkin) Next they upped all Friday to Sunday and often Monday Tickets - I got to barf when they try to push for $268 for change your ticket times - with frequency nowhere near QF or DG. Meaning Virgin is often cheaper.
With Tigers reliability problems - I don't know who are using them, not while Virgin are having a few cheapies thrown in to undo recent computer fiasco.

Jeststar has also winched up prices, and I am glad I booked and paid months ago.

AirAsia still has sales , but ordinary prices are often uncompetitive.

All quite interesting $Aussies goes up 20% and Airfares, Duty Free and even LPG at the local servo, prices have not budged a millimeter.

 

[ozbeachbabe]

I'd take all that financial mumbo jumbo with a grain of salt really as one can manipulate any kind of statistics to back up whatever point they're trying to make at the time.

Cost of a return QF economy ticket SYD/LAX/SYD in May 1982 AUD975.00 plus AU & US departure taxes which were paid locally at the airport as no taxes were collected with airfares back then.

Some 28 years later it's still possible to purchase a ticket for the same or even less in some cases including all the taxes!

Cost of a return Apex fare SYD/OOL/SYD in November 1986 AUD202.00 return which required a 30 day advance purchase & minimum 7 night stay away. This was of course prior to the deregulation of the domestic airline industry in 1989. Now 24 years later we can get fares for as low as AUD49.00 each way as advertised on the Jetstar website today for travel in early Nov through Mid Dec.

Will all due respect to the CommSec Analyst, he's probably better off commenting about the FTSE, NASDAQ & Dow Jones than on matters aviation as the comparisons above suggest:

 

[drewbles]

Admittedly it's from NoNews, but it's certainly not been bad:

Domestic airfares 'lower this year' | News.com.au

Also, these are the so-called 'experts' who tipped that airfares would soar *this* year with the ending of the GFC.

Airlines are still hurting a little I'd say. I'm certainly taking every advantage of the low fares, and it's still relatively easy to pick up a ~$1k air fare to the US with most carriers from SYD/MEL.

 

[ethernet]

Its not a history lesson.
Within last year airfare prices up, and obviously more than the glum bottom and GFC, and that ruinous period when oil hit $150 bbl. Besides raw ticket prices there is also the contract - err conditions attached, and lately these have also been scabbier and cheesier, as well as the add-ons like baggage, no service checkins, and the last restricted ticket change fees - all up up and up.

This time last year trips to Asia (Christmas-3 months) went on sale, this time they are not on sale, but April onwards are. The Aussie airline carriers are keeping their gunpowder dry for the shooting season (Muggins who reckon the aussie dollar is high), Bali bombings and Thai instability long forgotten - for a touch of foreign beer.

If there was a short notice syd->Lon for sub $1400 last year, there is buckleys now maybe $1800 odd ($400+30% increase against $USD) which is $400 plus 30% of $1800, minus $300 for real .gov taxes. You would think a $700-800 increase would offer some discounting. USA also used to cost more than Europe - not the case now.

Airfares for the footy grand finals, and the racing spring carnivals were/are also up.

No doubt about it airfares are up, and even in advance booking, they are up too.
The only sunshine is discounted business fares on the sandpit airlines.

 

[Dalescott]

We fly J with EK out of Melbourne, and have found that the cost is rising, and it has come to a point where we are looking seriously at Asian airlines to reduce the cost. Comsec report, was only proof of what I have know for a while. The Australian economy is booming, while the rest of the world is flat. So while airlines loose money in the rest of the world, we in Australia have to make up the difference.

 

[JohnK]

This time last year trips to Asia (Christmas-3 months) went on sale, this time they are not on sale, but April onwards are. The Aussie airline carriers are keeping their gunpowder dry for the shooting season (Muggins who reckon the aussie dollar is high), Bali bombings and Thai instability long forgotten - for a touch of foreign beer

Just for the record QF currently has a sale to Singapore <$800 return and Bangkok ~$1000 return. I have not seen airfares that low for many years.

 

[markis10]

Commsec is an average service for the average bloke wanting average intelligence. Like all stats its selective and they can be made to say what you want, some routes its at a high, some routes its at a low, all depends on competition and fuel prices.

 

[Oneworldplus2]

I'd take all that financial mumbo jumbo with a grain of salt really as one can manipulate any kind of statistics to back up whatever point they're trying to make at the time.

Fantastic post ozbeachbabe

We fly J with EK out of Melbourne, and have found that the cost is rising, and it has come to a point where we are looking seriously at Asian airlines to reduce the cost.

I can help you...fly whY and you'll reduce your cost quick smart.

 

[melaus]

Whilst some posts above indicate a fair bit of doubt on the findings, one thing is for sure that the "extra's" element of the fare structure is generally way out of proportion to the base fare.
Even when using one's FF points, sometimes you really have to decide if it's worth going down that path or searching out one of the cheapie sales with Air Asia for instance if Asia is your destination.
On one of their sales recently I secured two one way total fares out of Bangkok to Oz at less cost than the extra's if we had have used QF FF points. The extra charges added to the 60,000 points (for 2) amounted to near A$300.
We will fly back here for less than $300 and keep the points for hopefully some much more efficient way to use them. (Advice please?)

Yes, I know I may get some flack on using carriers such as above, but let me say that I've been using Air Asia since their inception, have probably had at least 50 sectors within Asia and back to Australia and I'm quite happy with what you get for what you pay for! I've got in excess of half a mill, QF points and am waiting to discover how to use the things.

Except of course for domestic!

 

[JohnK]

I've got in excess of half a mill, QF points and am waiting to discover how to use the things.

Try a QF Oneworld iaward n economy for 140,000 QFF points or 280,000 QFF points in business class.

Generally availability is quite good if you book it 4+ months from date of departure and avoid travelling during Australian school holidays.