Airfares fall as capacity recovers to pre-COVID levels

Airlines have finally shaken off the lingering effects of COVID-19, with capacity back to pre-pandemic levels for the first time.

Global seat availability climbed back over 100 per cent of 2019 levels in April, data from Flight Centre has revealed, with travellers enjoying lower airfares as a result.

"An analysis of key international routes for Australian travellers found fares on some international routes out of Australia dropped by up to 25 per cent," said Flight Centre Corporate managing director Melissa Elf.

"With more and more capacity and competition being introduced to the market, it's a trend we'll continue to see throughout the rest of the year."

Australia's international capacity is expected to tick up from 95 per cent to 98 per cent next month, while domestic capacity has been hovering between 98 and 100 per cent for the last few months.

Ms Elf said there are promising signs that airfares will continue to fall beyond the short term, with major carriers including Delta Airlines, Singapore Airlines and China Southern recently announcing new routes to Australia.

In the first quarter of 2024, flights to Australia's most popular travel destination - Indonesia - were down 21 per cent from the previous year at $798 return on average. Available seats to the holiday spot were at 115 per cent of pre-pandemic capacity.

Capacity to Japan, Qatar and Papua New Guinea are also above pre-COVID levels, while the UK is back even. Routes to Hong Kong and the US have the biggest room for recovery, at just 63 and 70 per cent of pre-pandemic capacity, respectively.

International and domestic seat capacity across Qantas and Jetstar recovered to 90 per cent of pre-pandemic levels in the second half of 2023, an increase of 25 per cent on the previous year, the group revealed in its February trading update.

"Group unit revenue fell 11 per cent with fares moderating as capacity returned," the company conceded in an announcement to the share market.

Despite falling airfares, rising cost-of-living pressures elsewhere are forcing more Australians to holiday within their own state or cancel travel plans altogether.

In a survey of 1500 Australians conducted by Pure Profile for the travel industry's peak body, 70 per cent planned to go away for a holiday during the Autumn school break, including 41 per cent within their own state, up from 36 per cent during summer.

A further 21 per cent will holiday interstate and eight per cent were planning to go overseas.

Tourism and Transport Forum chief executive Margy Osmond said it was pleasing to see Australians supporting the local economy and tourism operators.

"But we're concerned the sector is still feeling the impact of cost-of-living pressures with many families taking shorter holidays than originally planned, staying with friends or relatives to save money or recently cancelling their travel plans altogether," she said.

Just over half of respondents said cost-of-living pressures had impacted their decision to travel, with a quarter saying they would go away for shorter than originally planned as a result.