The Australian Competition and Consumer Commission (ACCC) has revealed that airlines in Australia have been increasing airfares and reducing the number of seats supplied.
This move comes in response to soaring fuel prices. As of early June, prices had risen by more than 40 percent compared with mid-February. While the Qantas Group and Virgin Australia had partially hedged their fuel costs, the smaller Regional Express (Rex) had not hedged at all.
The Qantas Group and Virgin Australia have reduced or suspended some domestic flights, and Virgin Australia has raised fares by around 5 percent. At the same time, they have continued to offer sales on price-sensitive routes to stimulate demand.
According to ACCC forecasts, the Qantas Group and Virgin Australia are expected to recoup part of the increase in jet fuel costs through higher fares and reduced capacity.
Passenger demand has remained solid, supported by major events such as the Easter holidays and the Formula 1 Australian Grand Prix. Although average revenue per passenger in April fell by 3.4 percent, many tickets were purchased before the fare increases took effect, meaning the full impact of higher fares is not yet reflected in the figures.
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