American Express Global Business Travel (AMEX GBT) has released its predictions for the year of travel ahead, highlighting that international airfares from Australia and New Zealand should soon start to decrease from the higher prices we have seen post-COVID-19. However, it seems unlikely that we will see a reduction in the cost of domestic fares.

Figures from AMEX GBT analyzed the numbers and identified that business class fares for domestic travel within Australia grew 3% when looking at schedules between 2023 and 2024, while economy class costs rose 3.1%.

More international competition

With carriers continuing to scale up their global operations, international airfares are expected to reduce in price, benefiting consumers for their next trip abroad. Examples include a significant increase in flights to and from China to Sydney Airport (SYD) or Jetstar's new connection to Osaka.

Figures from AMEX GBT identified that the cost of international airfare between Australia and Asia has dropped 5.6% for business class passengers. However, flights to New Zealand remain high, increasing by 2.5%. Economy class also offers some relief, with flights to North America down 7.7% and New Zealand down 3.9%.

Limited domestic competition

Air New Zealand captivates the lion's share of capacity in New Zealand, operating to 20 ports across the country; this is miles ahead of the closest competitor, Jetstar, which works to just five. This is a similar pattern across the ditch in Australia, where the Australian Airports Association (AAA) believes that Qantas Group (including Qantas, QantasLink, and Jetstar) and Virgin Australia demand 95% of all domestic air operations. The AAA noted that between pre-pandemic and 2022, airfares increased by 19.3%.

While there has been a global de-thaw of airline operations, as carriers look to scale up to what they once were, some airlines are still grappling with reduced aircraft, staffing shortages, or issues with aircraft, such as the A320 forged safety records dilemma caused by AOG Technics.

Surpassing inflation

Both domestic and international ticket prices have been above-expected inflation prices post-pandemic. However, the Australian government has published an Aviation Green Paper, the policy direction the Australian aviation space hopes to look at by 2025. This includes improved access to international airlines, providing more choices for consumers, and putting pressure on airlines for competitive airfares.

Airlines have taken the opportunity in the post-pandemic era to re-evaluate their operations and, with the delivery of new aircraft, look to introduce new routes not served before, such as Turkish Airlines' aspirations to connect Istanbul to Sydney and Melbourne via Singapore or United Airlines' highly anticipated service between San Francisco and Christchurch, which landed for the first time this weekend.

United's new service to Christchurch, New Zealand, marks the first time a US carrier has served the South Island since American Airlines's Los Angeles connection never came to fruition just weeks before the pandemic took hold and borders firmly shut.