Travelers looking back on 2019 not only reflect on the relatively hassle-free pre-Covid era, but are also aware of how low airfares used to be.
2019 could even be the time of “peak competition” between airlines, with airport departure boards full of flights and large aircraft such as the Airbus A380 and Boeing 747 jumbo jets bringing record numbers of seats in the sky.
2022 presents a very different scenario, even as the world moves forward eagerly to put the worst of the pandemic behind it.
Airfares are largely at two-year highs, as any traveler can attest, and they’re not about to return to that super-low 2019 benchmark.
“Airfare needs to go up,” suggests Qantas chief executive Alan Joyce, adding that “this is happening all over the world” as airlines face rising fuel costs, which locally it is accentuated by the weaker Australian dollar, together with a shortfall in the number of flights and the need. back in the black after air travel was destroyed by Covid-19.
Joyce’s remarks came as Qantas revealed its first post-pandemic turn to profit after 2 1/2 years of heavy losses, with a pre-tax profit expected of $1.2 billion to $1.3 billion in the six months from July to December 2022.
“This is a remarkable turnaround after accumulated losses of $7 billion since 2020,” Joyce reflected.
“But we’re seeing fuel this quarter is 76% higher than pre-Covid, and it’s still very volatile, so we need to get that back.”
Rates will drop, but when and by how much?
Mr Joyce believes Qantas’ average airfares will inevitably fall: “in the last ten years real airfares have come down, that’s what happens in this ultra-competitive aviation market”.
“But in this environment with the lack of capacity and high fuel prices, what we have to do is pass on the higher fuel price. Our fuel bill is going to be over a billion dollars this year, so it’s going through, and all the airlines are going through it.”
“If oil goes down, typically in the aviation industry those benefits are passed on to the consumer.”
And they have a way to go. While Joyce explained that “50% of economy passengers have paid less than $1200 to travel (round trip) to Singapore”, frequent travelers will remember the round trip fares from Sydney, Melbourne and Brisbane which regularly start under $800.
There is still a significant capacity deficit, especially on international flights.
While Qantas expects its total group capacity shared with Jetstar to reach 94% of pre-Covid levels by the end of this year, “growing to around 100%” by mid-2023, international capacity is currently fixed in only 61% of pre-Covid. -Covid levels, and will reach only 77% in June 2023.
“This is largely driven by the ability to return additional A380s from storage and required maintenance, as well as the delivery of three new Boeing 787-9 Dreamliners for Qantas,” the airline said.
Qantas has also today launched a week-long ‘megasale’ of more than one million heavily discounted airfares for flights across Australia during 2023, with Qantas economy one-way fares starting at $99 and $499 for business class.