Coronavirus: Business airfares at seven-year lows

Airfares have fallen to their lowest levels in years this month as airlines try to fill seats amid a rollercoaster of border changes.

Virgin Australia cabin supervisor Tracey Fitzgerald in the cabin of a Boeing 737.

Certain airfares have fallen to seven-year lows as airlines desperately try to fill seats on domestic flights while navigating spasmodic border closures.

The January domestic airfare index compiled by the Bureau of Infrastructure, Transport and Regional Economics showed business-class fares were almost 30 per cent cheaper than the long-term average, the lowest since February 2013.

Discounted fares were at 66.5 per cent of long-term averages, the cheapest in a year, down from 78.9 per cent in December.

The data coincided with the announcement of another airfare sale by Virgin Australia, with the added sweetener of the ability to change bookings free of charge until the end of June.

CommSec chief economist Craig James said COVID con­ditions meant airlines could no longer rely purely on slashing fares to boost patronage.

“Airlines can’t control border changes but they can help increase the confidence of passengers by offering assurances on things like the flight cancellation policy, the availability of refunds, and on-board and pre-flight hygiene measures. They’re the factors uppermost in people’s minds,” he said.

“People want certainty, which is not something anyone’s had to worry about too much until now. It’s always been about the frequency, safety and cost of flights.”

He said the sharp fall in business-class fares highlighted one of the biggest challenges facing airlines, in terms of luring corporate travellers back. “There’s no demand for business flights, so you have to discount more heavily. There’s a bit more leeway (for airlines) on leisure routes, where demand is high so fares are unlikely to fall too much, and could even be lifted.”

As well as offering greater booking flexibility and improving refund policies, airlines should think about extending expiry ­periods for frequent flyer points, Mr James said.

Qantas has previously come under fire for wiping out members’ points balances after 18 months of inactivity, and the airline has made some changes to its policy during the pandemic.

Extensions to the expiry period are being offered to overseas-based frequent flyers until June 30, 2021.

A Qantas spokeswoman said members needed only to earn or redeem one point in any 18-month period to keep balances intact.