Airfares in Australia: How much airlines increase prices on busy travel days

New figures have revealed just how much Australian travellers are slugged to fly on the busiest days of the year, with our two full-service airlines more than doubling average fares around major sporting events and New Year's Eve.

The figures compiled by industry data analysis firm Infare show that the average price paid for an economy class ticket between Melbourne and Sydney in 2017 was $199 on Qantas, and $156 on Virgin Australia.

But fares more than doubled ahead of New Years Eve celebrations, averaging $403 on Qantas and $395 on Virgin for travel on December 30.

Grand Final fares

Infare's data also shows that the second Ashes cricket test match in Adelaide caused an extraordinary jump in fares. Qantas tickets from Sydney to Adelaide on December 1, the day before the test's first day, were sold for an average of $725, compared to $202 for the whole of 2017. Virgin tickets sold for an average of $495, compared to a $157 for the whole year.

Likewise, tickets from Melbourne to Perth the day after the AFL Grand Final averaged $718 on Qantas and $506 on Virgin, compared to $295 and $251 for the whole of 2017. Fares from Sydney to Brisbane also doubled the day after the NRL grand final.

The data was provided to Fairfax Media by a source close to one of Australia's biggest airports ahead of a push by the major airlines to change how they are charged to use the facilities.

Infare is a subscription-only airfare monitoring service that airlines use to track how much their competitors are charging, and that airports use to monitor how much airlines make using their monopoly assets.

Airport charges remain static regardless of how much airlines are charging for tickets.

Normal business practice?

Graeme Samuel, the former competition tsar and now chair of the lobby group Airlines for Australia and New Zealand (A4ANZ), said hefty airfare markups on busy days did not constitute gouging, but was part of the normal function of any marketplace.

Advertisement

“Anyone who’s travelled will know that at peak times you will pay a higher price,” he said.

Qantas and Virgin both pointed out that airfares had been falling in real terms for the past decade.

But airports charges had kept going up, a Qantas spokeswoman said. "What these numbers show is that cheaper airfares sell out on the busiest days of the year, which isn’t news to anyone," she said.

Pricing airfares in line with demand made it possible to be as competitive as possible, a Virgin Australia spokeswoman said.

A spokesman for the ACCC said businesses were "free to set prices as they see fit, so long as they do so independently of their competitors and do not mislead or deceive consumers".

Gouging wars

The insight into how Australia's two major carriers balance supply and demand comes ahead of a major assault on Australia's airports by Airlines for Australia and New Zealand.

Representing the Qantas and Virgin Groups and their budget arms Jetstar and Tigerair, Air New Zealand and regional carrier REX, the group will on Thursday release a report highlighting the airports' market power and how it is affecting consumers and the Australian economy.

A4ANZ has been tight-lipped about what exactly is in the report. But the firm that prepared it, Frontier Economics, has previously prepared research for European carriers calling for "single-tilt" regulation of airport charges - a model which sees airports' non-aeronautical profits from things such as car parking and retail leasing deducted from the amount of revenue that needs to be raised from the airlines.

In Australia,  these two revenue and profit pools are managed separately.

The ACCC's latest report into the performance of Australia's four largest privatised airports released last month found that passengers were paying more to fly than they should because of increases to fees levied at airlines.

Paying more than you should

Melbourne Airport's "aeronautical revenue" per passenger rose 5.7 per cent and Sydney Airport's jumped 4 per cent, the report found, leading the competition watchdog's chairman Rod Sims to conclude that airfares' returns, already in decline, would fall even further without these increases.

The airports will be hauled before the government's Productivity Commission later this year.

The commission's last report into the sector in 2011 found that airport charges only had a minor effect on airfares.

Comments