Overseas travel getting cheaper as fares fall for the fourth consecutive quarter

Australia’s favourite overseas holiday destination is getting cheaper as international airfares continue to head south.

Travel to Bali is getting even cheaper, with new Flight Centre data showing airfares to the Indonesian holiday isle fell by an average of 17.7 per cent in the first half of 2024, compared to the same time last year.

The price drop was the biggest of any international destination from Australia, sliding from $1030 for economy return to $848, making flights to Bali even cheaper than New Zealand ($898 return).

Other destinations to see double-digit decreases in fares were Greece (down 13.17 per cent); Italy (down 12.74 per cent); the US (down 11.2 per cent) and Japan (down 10.67 per cent).

Falling fares were also recorded for France, Canada, New Zealand, India, Fiji and the UK as increasing competition among airlines put downward pressure on prices.

Overall, an average 13 per cent decline in fares was recorded for the six months to June 30, taking the average cost of an international economy airfare down from $1928 to $1678.

With eight airlines servicing routes to Bali, it stood to reason why those fares were falling the fastest.

Nusa Dua in Bali is a major drawcard for families seeking a good value holiday. Picture: iStock

Greater competition on European routes, with the entry of Turkish Airlines to Australia, was also helping to make continental travel more affordable.

The same was true of the US with United, American and Delta all planning capacity increases to Australia in coming months.

Flight Centre travel group managing director James Kavanagh said fares had now fallen for four quarters on the trot, in a trend they hoped would continue.

“It’s welcome news all around, but particularly for those wanting to escape to Indonesia, Greece and Italy where we’ve seen the most significant drops,” said Mr Kavanagh.

“Indonesia was down 18 per cent which equates to an average saving of $182, Greece was down 13 per cent or $389 and Italy was also down 13 per cent or $365.”

He said the savings meant travellers could afford to do more trips, or spend more on other experiences while abroad.

“We’re still not seeing pre-Covid prices but it’s the fourth consecutive quarter that airfares have decreased across the board and something we hope will continue as airlines introduce new routes and bring back some familiar ones to our shores,” said Mr Kavanagh.

The fare update was included in new guidance from Flight Centre, forecasting a slightly lower-than-expected profit before tax of between $316m and $324m with a midpoint of $320m, compared to $304m to $344m ($324m midpoint).

A total transaction value (TTV) of $23.7bn was also short of consensus expectations as a result of “airfare deflation”.

Flight Centre says falling fares will only encourage more people to travel. Picture: iStock

Flight Centre managing director Graham Turner said the reduction in fares, and therefore TTV, was not unwelcome as it was likely to stimulate further demand for international travel.

“TTV for the 2024 financial year is likely to finish in line with our record 2019 result, which means we will have delivered the same volume of sales with about 65 per cent of our 2019 workforce,” said Mr Turner.

“This underlines the positive returns we have started to see on the investments made during the pandemic to create a more productive and efficient business, while maintaining the assets and customer value propositions that have long underpinned our consistent sales growth record.”

Citi analyst Samuel Seow said the drop in fares could have implications for the Qantas Group, as the biggest international carrier in and out of Australia.

“We note second half 2024 expectations for Qantas are for international revenue per average seat kilometre declines of about 10 per cent, and Jetstar international declines of about 6 per cent,” said Mr Seow.

Looking ahead to the first half of the 2025 financial year Mr Seow said falling prices were expected to moderate.

Flight Centre shares fell in response to the updated profit guidance, closing down 4.7 per cent at $21.92 a share.

Originally published as Overseas travel getting cheaper as fares fall for the fourth consecutive quarter