Domestic airfares in Australia actually rose in 2023 – despite the ACCC warning airlines to lower prices over a year ago.
Analysis of BITRE data released by the Department of Transport shows the average monthly index price of standard economy tickets increased from an average of 75.1 to 81.4.
In December 2022, the competition watchdog said in one of its last quarterly reports into the aviation industry that it was “expecting” prices to go down in the following 12 months. It also warned airlines to increase the number of services to facilitate cheaper flying.
However, the sector was subsequently affected by rising inflation and the price of jet fuel unexpectedly rising in the latter half of last year, which had previously been coming down.
Airlines also responded to the ACCC’s findings by significantly increasing the number of services and putting more large jet aircraft in the skies.
BITRE’s domestic airfare index monitors changes over time in the price of Australian air travel. The current system began in October 1992 and is presented as a price index in various fare classes, based on the top 70 routes.
BITRE defines the best discount as the cheapest fare available, excluding baggage surcharges, and covers Qantas, Virgin, Jetstar and Rex.
The ACCC, though, in its quarterly reports, was able to monitor both BITRE data and its own figures obtained directly from airlines, giving an unparalleled insight into the situation.
Those reports were discontinued by the Morrison government but will restart after a decision by the current Labor Transport Minister, Catherine King.
The ACCC’s last report, published in June 2023, noted that prices had “generally fallen” in recent months but was able to come to that analysis using its own data that uniquely referenced inflation-adjusted real prices.
Its last report noted a key reason for the then fall was the decline in the price of jet fuel, which has subsequently gone up.
The resumption of ACCC aviation monitoring was one of the key recommendations from the recent Senate Select Committee on Commonwealth Bilateral Air Service Agreements, chaired by Nationals Senator Bridget McKenzie.
King and Treasurer Jim Chalmers took a swipe at the previous Morrison government for what they said was an inadequate response to the ACCC’s previous monitoring regime, which ended in June, saying they have found “a better way” to restart it.
“The 12 reports under the previous government found declining service standards and higher prices but were not acted on.
“In contrast, the Albanese Government will use ACCC monitoring to help inform the Aviation White Paper which is setting the policy direction for the sector out to 2050.
“We will ensure healthy competition plays a key role in shaping the future of the sector.”
The government last month released a Green Paper to gather feedback ahead of next year’s White Paper, which will set the official policy direction for the aviation sector to 2050.
