Mighty dollar causes rush for flights

THE high dollar has led to a rush for flights as international travel becomes a cheaper option.

Qantas Airways chief Alan Joyce said Jetstar was growing at a rate of 20 to 30 per cent annually across its domestic and international operations / AFP

THE high dollar has helped drive a 10 per cent increase in passenger numbers over the past two months for Jetstar International.

The increase came as the Qantas-owned budget carrier ramped up capacity into leading offshore tourism destinations, The Australian reports.

Qantas revealed yesterday that numbers had risen 8.5 per cent during July and August, helped by the rapid growth of Jetstar International, which carried 691,000 passengers over the two months compared with 628,000 in the same period last year.

The Aussie reached its highest value since July 2008, when it touched 97.32 US cents overnight yesterday.

At 7am (AEST), the dollar was trading at 96.72 US cents, down 0.1 of a cent from yesterday's close of 96.82 cents.

In August, the Qantas Group's passenger numbers were up 7.9 per cent from a year ago, bolstered by a 5.7 per cent increase from Jetstar International.

"We do experience a change in travel patterns when the value of the Australian dollar increases," said a Jetstar spokeswoman.

"We have certainly seen an increase in demand for people wanting to travel abroad."

She said the airline was growing capacity into Hawaii, New Zealand and Bali. Jetstar has grown capacity into Hawaii by 25 per cent so far this year.

The number of passengers that flew on Qantas International during July and August rose 2.6 per cent to 1.01 million compared with 986,000 a year ago.

Importantly, yield increased by 12.1 per cent compared with the corresponding prior-year period, highlighting the return of premium business travellers.

Qantas chief executive Alan Joyce on Wednesday acknowledged the positive impact of the dollar on the airline's profitability by lowering the cost of its fleet renewal program and reducing its fuel bill.

Qantas is spending more than $17 billion to buy more than 150 new aircraft over the next eight years. The aircraft are priced in US dollars.

But Mr Joyce warned about the impact of the dollar staying high.

"A strong dollar has a negative impact on our balance sheet and a dampening effect on in-bound traffic. But it has a positive impact on outbound tourism," he said.

He said Australia had become a more expensive destination for key markets such as the US and Britain, whose economies were suffering from the effects of recession.

"Qantas spends $3bn on fuel a year and a higher Australian dollar would mean bigger fuel bills. As a business we do not want this to be long term," Mr Joyce said.

Fuel represents more than 20 per cent of Qantas's cost base, but the $US price of oil has historically risen when the US dollar's market value has fallen, reducing the savings impact for the airline.

Read more about international flights at The Australian.

- With AAP