International airfares drop as capacity and competition kick in

airfares

Average international outbound economy airfares across all carriers have decreased by 12.9 per cent in the second half of 2023, compared to the same period in 2022.

The price drop equates to an average saving of $280 per ticket, according to new data from FCM Travel and Corporate Traveller.

All cabin classes followed suit, with business class fares down by $834 (7.99 per cent) and first class fares dropping $1,282 (8.02 per cent) during the same period.

“We’ve spent some time now assuring our corporate travellers that as airlines continue to recover, as capacity and competition comes back to the network, our travellers would start to see the cost of travel drop,” said Flight Centre Corporate MD for ANZ/Global FCM COO Melissa Elf.

“We’re starting to see the signs of exactly that and although we’ve still got some way to go yet in terms of getting back to full capacity, particularly internationally, there’s no doubt we’re beginning to feel the positive effects.”

Flight Centre Corporate data found economy flights into Hong Kong from Australia recorded the highest rates of relief, at -35.75 per cent. This was followed by New Zealand (-23.57 per cent), Singapore (-15.65 per cent), and the United States (-16.06 per cent). Hong Kong was also the biggest winner for business class fare drops, at -23.83 per cent, due to the removal of quarantine requirements for international entrants in September 2022.

Prices dropped significantly once this came into effect, reflecting the decline in fares in 2023. This was followed by the United States at -11.07 per cent drop in business class airfares, Canada at -10.58 per cent and Germany at -8.67 per cent.

First class fares into the United States showed the greatest drop with the average fare down by -14.8 per cent.

“Our data shows that Southeast Asia is back to 107 per cent capacity on pre-2019 levels, and it’s clear that more flights and more competition has led to the significant drop in airfares that we’re seeing into countries like Hong Kong and Singapore,” Elf said.

“There’s more room for prices to drop to destinations like the Middle East, New Zealand, and North America, for example, which are at pre-2019 capacity levels of 81 per cent, 86 per cent and 91 per cent respectively.

“There’s still restricted capacity on European flights and that’s the last frontier we need to conquer for customers to feel relief on routes to the likes of the United Kingdom, France, and Italy – this is evidenced by softer airfare decreases to these destinations.

“With demand into Europe high, it’s critical more flights and competition are added, with the recent announcement like the granting of slots to Turkish Airlines being exactly what the industry needs for prices to drop even further.”

Flight Centre Corporate is anticipating pre-2019 capacity to return domestically next month, with international capacity looking to follow suit by mid-2024.