The Playbook For The Modern Man

Expert’s Warning For Australians Riding Qantas’ Cheap Flight Frenzy

Australia is entering an era of cheap domestic flights. How long will it last?

Cheap flights were to 2019 what rude sunburn is to Mykonos. As 2020 coughed us into hiding, however, the future of ~travel~ became as uncertain as when you’ll get your next ‘naughty tan.

Throughout it all though, cheap airfares have remained constant. The trillion-dollar question is how long they’ll last.

There’s no Lonely Planet guide to this. However, to get an idea, DMARGE spoke to Rico Merkert, Professor and Chair in Transport and Supply Chain Management at the University of Sydney.

We put to Rico the argument made in a recent ESCAPE article, where Brian Pearce, chief economist at the International Air Transport Association (IATA) was quoted as saying cheap (international) flights will likely last about two years (before debt, subsidies ending and renewed demand see prices get back to normal, possibly higher).

While Rico was quick to point out “no one knows what COVID 19 will do next,” he backed Pearce’s take up, telling DMARGE, “In principle I agree with that IATA comment.”

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That said, “This is not over yet and at least outside Australia [is] a very fluid situation,” Rico told us. “Domestically we may see prices going up in the core routes quite quickly (assuming the outbreak in Victoria is brought under control) but internationally no one knows what is going to happen.”

For now, cheap domestic flights appear set – for the time being – to continue, with Qantas last week elbowing in on regional carrier Rex’s Sydney to Orange route with undercutting fares (Qantas is currently offering round trips in the $360 vicinity while Rex is offering the same for $412).

Qantas also just announced a points partnership with Afterpay.

Both these changes come after Alan Joyce teased (then delivered) $19 Sydney to Melbourne flights with Jetstar, made Qantas’ much awaited Sydney to Byron Bay flight route a reality, and delivered tantalisingly cheap (sub $100) Jetstar return trips on the same route, all in the last few months.

 

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Meanwhile, Rex has been spreading its wings too (see: The Obscure Regional Carrier That Could Replace Virgin Australia) and Virgin Australia has been making moves to become leaner and meaner, focussed on stealing the middle market out from under Qantas on high traffic domestic Australian routes (it still has a hell of a long way to go, but that appears the plan).

All these changes are positive news for Aussies looking to scratch their wanderlust domestically in the next few months.

However, as professor Merkert points out, prices, especially on popular corridors, can jack up quickly (as soon as there is requisite demand). On top of that, as we reported in May, once airlines have coaxed us back into the air, there is going to be a lot of debt to service, so in the immediate years after The Return Of Demand prices could be, if anything, higher.

Not to mention, as Traveller reports, “Any fire-sales [pricing] are likely to be shortlived by the new era of COVID-19-impaired aviation because the costs of implementing and maintaining an extensive new regime of health and hygiene measures are certain to be astronomical and passed directly onto the consumer.”

Other experts have warned domestic Australian flight prices could rise by 50%, thanks to this year’s shakeup.

Traveller flagged the situation in the US as a point of comparison: “Airlines in the US are already discovering that they can’t escape the realities of social distancing in the air.”

“Not only have many blocked out middle seats but also those on either side of passengers. Inevitably, and in a sign of the COVID-19, vaccine-free air travel landscape set to emerge, one airline has even started charging for the reassurance of a empty seat next to you.”

Traveller also pointed out Alexandre de Juniac, director-general and chief executive of the International Air Transport Association (IATA) declared in April that if social distancing on flights remains imposed, “cheap travel is over.”

So, unless airlines can convince people to go back to the knee-to-knee days (and even then) $19 Sydney to Melbourne flights (say) as a widespread policy will probably never be economical.

In the aviation industry’s defence, as Australia recovers from the pandemic, cheap flights will be a crucial economic building block. So while we shouldn’t expect them in the long term, we may as well enjoy them while we can.

Byron Bay awaits…

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