Budget airfares near record lows

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Budget airfares near record lows

The cheapest economy tickets for Australia's domestic flights have tumbled to nine-month lows, official figures show.

A report from the Bureau of Infrastructure, Transport and Regional Economics (BITRE) showed best-discount economy tickets in January were at levels not seen since April 2012.

The BITRE index measuring best discount prices was 58.1 points in March, down from 61.3 points a year earlier and the lowest since reaching 54.8 points in April.

The Centre for Aviation said it expected airfares at the budget or leisure end were expected to remain under pressure in 2013 as Australia's domestic carriers poured extra seats into a market that was already oversupplied with capacity.

"All those extra seats should keep a lid on any fare rises," the centre said in a research note on Wednesday.

"And if Virgin is given the regulatory green light to take effective control of Tiger Australia, along with the promised investment to expand the low-cost carrier, there is a real prospect that fares will reduce even further."

Virgin has applied to the competition regulator to buy a 60 per cent stake in Tiger.

Meanwhile, the index measuring business class prices stood at 63.2 points in January, compared with 78 points in the prior corresponding period.

Fares for the pointy end of the plane tumbled in 2012 as Virgin Australia rolled out its business class product across its route network as the carrier sought to increase its share of the corporate market dominated by Qantas.

Qantas closed up one cent at $1.54, while Virgin ended half a cent weaker at 43 cents.

AAP

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