Global airfare prices are dropping fast, driven by a surge in new airline capacity and heightened competition in key international markets. According to the latest data from Flight Centre Travel Group’s corporate divisions—FCM Travel and Corporate Traveller—economy-class fares for international flights have fallen by an average of 5-10% in the most recent quarter (July – September 2024) compared to the same period last year. This equates to savings of over $100 on each leg of a journey for travellers, a much-needed break for corporate and leisure travellers alike as global travel demand surges.

Business class travellers are also benefiting from the trend. Flight Centre Corporate’s analysis reveals that business-class fares have dipped by 4% in the same period, translating to more than $300 in savings per ticket. The most significant fare reductions have been seen in routes to the Middle East and Europe, particularly destinations like Qatar, the United Arab Emirates (UAE), France, the United Kingdom, and Italy.

Capacity Growth Boosts Airline Competition

Melissa Elf, Global Chief Operating Officer of Flight Centre Corporate, attributes this downward price trend to a growing capacity and heightened competition among international carriers operating out of Australia.

“Airfare prices have been consistently dropping for more than a year, and this isn’t just a short-term trend; it’s a sign of increasing stability in the travel industry,” Elf remarked. “Economy fares to key destinations like the UAE, Qatar, and major European countries have seen the steepest drops. These are crucial hubs, especially for corporate travelers, as the Middle East serves as a gateway to the rest of the world.”

This report from Flight Centre Corporate follows the recent Free Trade Agreement (FTA) negotiations between Australia and the UAE, which promise further connectivity and economic benefits between the two regions.

“The FTA between Australia and the UAE is a major win for both trade and travel. Not only does it strengthen our ties in sectors like critical minerals and clean energy, but it also opens doors for further airline capacity and routes between the two regions,” Elf added.

Middle East & Europe Lead the Fare Drop

The Middle East and European markets have been slower to catch up with fare reductions earlier in 2024. However, the latest data shows that Qatar, the UAE, France, and Germany now charge cheaper fares. These regions have joined other major markets like the United States and Italy, where business-class fares have dropped by 10% and 8%, respectively.

The increased airline capacity and growing competition are helping stabilize and even reduce international airfares, benefiting leisure and corporate travellers. The Australian government’s recent negotiations to secure air agreements will further accelerate these positive trends.

Domestic Airfares on the Rise

While international airfares are falling, the same cannot be said for domestic travel. Domestic airfares rose 3-5% in the most recent quarter, driven partly by high travel demand during the September holidays and Rex Airlines’ departure from key trunk routes. On average, domestic tickets have increased by $10-$20 per flight.

Virgin Australia & Qatar Airways Deal Promises Future Savings

A potentially game-changing partnership between Virgin Australia and Qatar Airways, set to be finalized by mid-2025, is expected to add much-needed capacity to Australia’s international travel market. This deal, currently awaiting approval, would introduce new connections between Brisbane, Sydney, Melbourne, Perth, and Doha. From Doha, travellers would gain access to over 107 new destinations across Europe, the Middle East, and Africa.

“There’s a clear correlation between increased airline capacity and falling airfare prices,” Elf noted. “With high demand for travel to Europe, the Middle East, Asia, and the U.S., it’s essential that we see more flights and increased competition. If approved, the Virgin Australia-Qatar Airways deal will be the kind of capacity boost the industry needs to push fares down even further.”

Elf also emphasized that the partnership will positively impact domestic air travel. “As international capacity grows, more aircraft will be freed up to service domestic routes, potentially stabilizing and reducing domestic fares,” she said.

Corporate Travel Budgets on the Rise

Despite rising domestic airfares, corporate travel remains a crucial part of business growth, with companies allocating more budget for travel. Flight Centre Corporate says nearly 40% of businesses plan to increase travel in the upcoming financial year, while 42% expect to grow their travel budgets.

“Corporate travel is an essential driver for business success. Whether it’s attending meetings, conferences, or events, companies are willing to invest in travel to secure new opportunities and retain staff,” Elf explained.

As global airfares stabilize and the airline industry becomes more competitive, travellers can look forward to more affordable and accessible flights—particularly for international routes. With the potential for even further airfare reductions, it’s a promising time for corporate and leisure travellers.

 

 

 

Written by: Christine Nguyen

 

 

 

 

 

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