Government’s flight index reveals domestic flights more expensive than a year ago

NOSEDIVING oil prices have been a godsend for Aussie families at the petrol pump. But what the cheaper oil mean for the cost of flights?

(FILES) This September 23, 2013 file photo shows an American Airlines Boeing 737 airplane as it takes off from a runway at Ronald Reagan Washington National Airport in Arlington, Virginia. US aerospace giant Boeing on January 6, 2015 reported a banner year in 2014 for commercial aircraft, breaking records for new orders and deliveries. Boeing said it booked 1,432 net orders for commercial aircraft last year, with a list price value of $232.7 billion, topping its 2007 previous record. The company's backlog of unfilled orders climbed to 5,789, also an all-time high. For the second year in a row, the company said it had delivered a record number of airliners, at 723, as it stepped up production rates. AFP PHOTO / Saul LOEB

THE DROP in oil prices has been welcomed by consumers across Australia but one of the expected benefits has failed to materialise.

Conventional economic wisdom led many to predictthat the price of airfares would lower in step with cheaper jet fuel.

However according to data released by the Australian government, prices of domestic airfares are up from January of the previous year, despite oil prices hitting a five-year low at the end of 2014.

The government’s airfare index for January shows the best discount airfares are 11.7 per cent higher than at the same time last year.

Consumers aren’t seeing lower airfares despite a drop in oil price. AFP PHOTO / Saul LOEB

The domestic fare snapshot shows business class fares are 7.3 per cent up from 12 months ago, while full economy fares are 2.5 per cent higher.

Restricted economy fares were the one category to see a fall in price and were down 4 per cent on average.

Australian carriers do not impose passenger fuel surcharges on domestic flights. But with cheaper oil projected to add $30 million to Qantas’s bottom line in the first half of this financial year, many hoped to see prices come down across the board.

Previously beleaguered Qantas boss, Alan Joyce, said last year surcharges on international flights did not fully cover the cost of fuel and indicated they will not be cut unless there was a sustainable cut in fuel prices.

Originally published as Government’s flight index reveals domestic flights more expensive than a year ago