The Australian Competition and Consumer Commission (ACCC) has predicted a profitable financial year for three major airline groups in Australia with domestic airfares soaring above pre-pandemic level and robust routes expansion adopted by the airlines. The quarterly report showed a 27% rise in average revenue per passenger as compared to October 2019.
Anna Brakey, Commissioner, ACCC, said: “Airfares have risen due to strong demand for travel and constrained supply as airlines have scaled back their schedules in response to high jet fuel costs and operational challenges.
The report also threw light on how the discounted economy fares have increased the most because with fewer flights but strong demand, the index across Australia’s top 70 domestic routes in November 2022 was more than double what it was in April 2022, when it hit an 11-year low. In September this year, the same index of the cheapest available fares reached a 15-year high.
“Historic lows and highs for discount airfares in the same year illustrate how changeable this market has been as the industry recovers from the pandemic. We accept that the airlines are still experiencing some pandemic-related resource challenges, but the ACCC will be monitoring them closely to ensure they return capacity to the market in a timely manner to start easing pressure on airfares. We would be concerned if airlines withheld capacity to keep airfares high,” Brakey added.
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Data collected by the ACCC from Qantas, Jetstar, Virgin Australia and Rex.[/caption]
After some sizeable losses due to the pandemic, the airlines are forecasting positive financial returns on the back of strong demand and high airfares. The Qantas Group, Virgin Australia, and Rex all expect to be profitable in the current financial year ending June 2023. The Qantas Group expects an underlying profit before tax of between $1.35 bn and $1.45 bn for the six months to the end of 2022, which is close to the company’s record for a full year of operation.
Flight cancellations and delays spiked in winter this year as airlines dealt with high rates of staff illness, workforce shortages, and supply chain disruptions. While staff absences have declined, the industry continues to deal with workforce shortages and supply chain issues. There’s also uncertainty about how the most recent increase in COVID-19 cases will impact the industry.
“As we are heading into the summer holidays, the airlines have told us they are keeping additional crew and aircraft on standby to help minimize delays. The airlines have significantly improved their reliability following historic lows over winter; however, flights are still regularly delayed,” Brakey further added.
Jetstar, Qantas, Rex, and Virgin Australia collectively canceled 2.9% of their domestic flights in October 2022, down from 6.4% in July 2022 and closer to the long-term average of 2.1%. Qantas and Rex canceled the lowest proportion of flights in October, and Qantas had the best on-time performance of the airlines.