Emirates return expected to spark price war on international fares

Trips to Europe are about to get cheaper, with Emirates’ return to Adelaide expected to spark a price war between rival airlines. See how much you could save.

Emirates’ resumption of daily services from Adelaide later this year is expected to trigger a price war between rival airlines, with cuts of up to 10 per cent expected on fares to popular destinations including Europe.

Travel industry veteran and prominent South Australian businessman Phil Hoffmann described Emirates’ return as a game-changer for the local market, putting the pressure on other major airlines to cut prices which have remained stubbornly high in the aftermath of the pandemic.

“Certainly having Emirates back will give us a lot more coverage again and competition, and competition will lower the airfares,” he said.

“They’ve been ridiculous in the past, with the airfares that we’ve had over the last 18 months – it’s been unbelievable.

“It just depends on what type of planes they’re (airlines) flying and what capacity they have … but maybe coming off 8-10 per cent in the next 12 months – that’s what we think is going to happen.

“We’re already seeing economy fares come down considerably at the moment – you can get some fares to Europe under $2000, so I think all that’s going to help the momentum of pulling the fares down to reasonable levels.”

Emirates confirmed in February that it would resume daily services at Adelaide Airport in October, providing connections through Dubai to destinations including the UK, Europe, India, and the east coast of the US.

Phil Hoffmann is expecting international fares to come down later this year. Picture: Russell Millard

The relaunched Emirates flights will bring the number of international airlines flying to Adelaide to 10.

Qatar Airways and Singapore Airlines are expanding their capacity later this year through additional services and larger aircraft, while Adelaide Airport is working behind the scenes to lure back Cathay Pacific and China Southern which, like Emirates, suspended services during the onset of Covid-19.

A Cathay Pacific spokeswoman said the airline was increasing its global capacity in a “measured and responsible manner”, but would not confirm if and when it was considering a resumption of its Adelaide services.

Adelaide Airport managing director Brenton Cox said additional capacity out of Adelaide later this year would drive down prices but warned fares were unlikely to dip back down to pre-Covid levels in the near term.

“The increased competition will inevitably improve pricing, but unfortunately never as much as the end customer will want, in part because costs are higher now than they were pre-pandemic,” he said.

“Labour costs, on average, are around 30 per cent higher, fuel costs are structurally a little higher as well, and maintenance costs for aircraft are also high.

“But certainly we would expect to see, as increased seat capacity comes into the market, that will increase competition and will cool some of those fares from some of the hot levels that we’ve seen over the last few years.

“We’re looking forward to increased fare competition in the next 12 months.”

Emirates will resume international flights from Adelaide with its Boeing 777-200LR.

Mr Cox said international passenger numbers out of Adelaide were tracking 109 per cent higher than pre-Covid levels.

An Emirates spokeswoman said that while competition was one factor that influenced international airfares, the aviation industry was also grappling with higher costs which put pressure on pricing.

“The industry is dealing with a sharp rise in operating costs compared to what they were pre-pandemic. Jet fuel costs continue to be volatile, and at the same time, ground handling, inflation in catering prices and employee costs have risen by double digits,” she said.

A Malaysia Airlines spokeswoman echoed those warnings, saying the airline did not expect prices to come down due to “persistently high fuel and forex (foreign exchange) costs in the market”.

Despite the current elevated prices, Mr Hoffmann said demand for international travel remained as strong as ever.

“2023 was a very big year for Europe, and my prediction at the moment is 2024 could be bigger, and certainly the numbers are showing that in the current bookings,” he said.

“What we are seeing trending is that a lot of people who weren’t able to fly for the last three years over Covid have just lost that time and want to pick it up, and pick up ticking off the bucket list. So that’s really driving demand stronger than we’ve ever seen before.”

Originally published as Emirates return expected to spark price war on international fares