This Year's Domestic Air Travel Costs Have Dropped and Might Remain Low for a Clear Reason

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Key Points

The global decline in jet fuel prices has decreased operational expenses for airlines.
There is an increase in the availability of seats on flights.
Australian airlines are set to introduce new overseas routes this year.

The reduction in jet fuel costs has led to more affordable airfares for those traveling within Australia, and this trend is anticipated to persist.

Figures from FCM Consulting, a corporate travel consultancy, indicate that domestic economy airfares were 12% cheaper in the first two months of 2025 compared to the same period the previous year.

This translates to an average savings of $29 per ticket.

The reduction in ticket prices occurs even though the Australian Competition and Consumer Commission (ACCC) has noted that limited competition domestically is allowing major airline groups like Qantas and Virgin to enhance their profit margins.

Qantas Group’s pre-tax earnings rose to $1.5 billion over the last six months of 2024, while Virgin Australia also reported unprecedented profits; yet, market changes since the beginning of the year have been favorable for travelers.

Jet fuel dropping in cost

Fuel is the largest operating cost for airlines, so fluctuations in fuel prices are passed through to airfares.

Ongoing weakness in jet fuel prices is expected to continue putting downward pressure on airfares in the coming months, according to the ACCC.

FCM Consulting director Felicity Burke said Australia and the broader Asia-Pacific region had experienced sharper drops in fares compared to the rest of the world.

“For quite some time, we have anticipated that factors like increased global capacity and reductions in jet fuel costs would lead to lowered airfare prices in various regions. This is one of the multiple reasons why this is materializing now,” she expressed to the Australian Associated Press.

More seats available

Another factor in the cost of air travel is seat availability.

Around the world, more seats are available on planes, contributing to falling costs for travellers on international economy flights.

Global capacity in May was 7 per cent higher than in 2019 and 5 per cent higher than at the same time last year.

International economy fares from Australia decreased by 5% in January and February compared to the same timeframe last year, while business class fares saw a 3% decrease.

New flights on the way

More routes are set to launch in the second half of this year, with Virgin’s partnership with Qatar Airways adding further competition on the highly trafficked Australia to Europe corridor.

“Through this partnership with a world-leading global airline, we expect to not only create more choice for travellers but also drive healthy competition, which typically helps to place downward pressure on fares over time,” a Virgin Australia spokesperson told AAP.

Qantas will also launch new routes in late 2025, including Adelaide to Auckland and Perth to Auckland, as well as Perth to Johannesburg.