Media Releases

Travellers Cashing in as International Airfares Fall

Jul 1, 2009

International flights are becoming significantly more affordable for Australian travellers, research by Flight Centre shows.

A review of international fares by the company shows that its advertised online prices are now 15 per cent cheaper on average than five years ago.

This equates to an average saving of $206 on each of the reviewed return fares to popular international destinations.

While airfare prices have fallen during the period, average wages have increased significantly.

Figures for the May 2009 quarter are not yet available, but Australian Bureau of Statistics figures show that average full-time wages increased more than 20% between the May 2004 and November 2008 quarters.

Flight Centre Limited Australia executive general manager Shannon O’Brien said international fares were the cheapest in memory and, at current prices, were probably unsustainable for airlines.

He said increased competition, the advent of low cost carriers and, more recently, a slowdown in demand for long-haul flights had combined to create a golden era for travel bargain hunters.

“Fares were already extremely affordable and have fallen further recently, particularly with the arrival of new carriers on the Los Angeles route,” Mr O’Brien said.

“The overall deals that are currently available are generally terrific value and will probably never be repeated.

“Flight Centre has recently offered return business class flights to Europe for less than $3000 and economy fares from Sydney to New York have been available for less than $1000.

“While hugely positive for our customers in the short-term, these eye-catching fares will not be sustainable for airlines in the medium-term.”

Flight Centre’s review took in international airfares that were advertised on flightcentre.com.au on May 18, 2004 and compared them to flights advertised on the website on May 18, 2009.

The largest decreases were recorded on return flights from Sydney to Los Angeles, Bangkok and New York.

Fares to Hong Kong and Johannesburg remained steady, while return fares to Wellington increased 17%, making it the only city to record a significant rise over the five-year period.

Advertised fares to London fell 6% to $1455, although greater savings have been available with Flight Centre recently offering return fares to London from Brisbane from just $1299.

DESTINATION ADVERTISED
PRICE ON 18/5/04		 ADVERTISED
PRICE ON 18/5/09		 REDUCTION
Los Angeles $1725 $1025 Down 41%
London $1544 $1455 Down 6%
Paris $1458 $1379 Down 5%
Buenos Aires $1783 $1399 Down 22%
New York $1725 $1339 Down 22%
Johannesburg $1836 $1839 Flat
Bangkok $1012 $719 Down 29%
Hong Kong $1016 $1019 Flat
Wellington $398 $465 Up 17%

Flight Centre Formally Ends Singapore Airlines Contract Negotiations

Jul 1, 2009

Flight Centre Limited (FLT) will continue to sell Singapore Airlines’ (SIA) fares but has formally ended 2009/10 preferred contract negotiations with the airline.

After four months of negotiations, FLT today advised SIA’s management that the airline’s preferred supplier agreement would not be renewed.

Managing director Graham Turner said FLT’s decision was based on unattractive contract offerings that would have led to uncompetitive customer offerings.

As a non-preferred airline, he anticipated SIA would lose more than half the business FLT previously expected to generate for it during the 2009/10 financial year.

During 2008/09, FLT’s 1000 Australian leisure and corporate travel outlets generated more than $300million in revenue for SIA.

By shifting potential SIA business to other airlines, FLT expects improved profit under its new mix of preferred carriers.

“We would like to work proactively with SIA but unfortunately its final offer for 2009/10 was inferior to agreements that are in place with its major competitors in this market,” he said.

“We have decided on this basis not to promote SIA as a preferred carrier.

“SIA’s use of fuel surcharges was also a factor, with these confusing and seemingly excessive charges now making up more than 30% of SIA’s base airfares. For a flight to London, SIA’s fuel surcharges are, in fact, among the highest in the world.”

Contrary to some industry suggestions, Mr Turner stressed that FLT would not follow the lead of India’s travel agents, who have boycotted Singapore Airlines.

“Our decision to walk away from a preferred supplier agreement with SIA will have no impact on our leisure and corporate travel customers or on our bottom line.

“Our 4500 travel agents in Australia are committed to ensuring that:

  • Our customers always get SIA if that is their preference
  • We will never be beaten on price and will beat any genuine quote from an airline, competing travel agency or website (subject to availability and based on Australian registered businesses and websites and for travel departing within Australia); and
  • We will support our preferred partner airlines wherever possible.”

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