If you’ve been eyeing a cheeky getaway or planning a long-overdue visit to the grandkids interstate, you might have noticed something surprising: airfares are getting cheaper. Yes, you read that right.
Despite headlines about Qantas, Virgin, and Jetstar raking in record profits, the cost of flying for everyday Australians is on the way down. So, what’s going on in the skies above us, and how long can we expect this trend to last?
Let’s start with the numbers. According to data from FCM Consulting, domestic economy airfares in the first two months of 2025 were 12 per cent cheaper than the same time last year.
That’s an average savings of $29 per ticket—not too shabby if you book for the whole family or plan multiple trips.
Two significant factors drive this price drop: cheaper jet fuel and more flight seats. Globally, jet fuel prices have fallen by almost 17 per cent compared to the 2024 average.
This is partly due to economic uncertainty and international trade tensions, such as Donald Trump’s trade war, which have curtailed oil demand.
Since fuel is the single biggest operating cost for airlines, any dip in price tends to affect the cost of your ticket.
At the same time, airlines have been adding more routes and increasing the number of flights, especially as the world recovers from the COVID-19 travel slump.
Global airline capacity in May was 7 per cent higher than in 2019, and 5 per cent higher than last year. More seats mean more competition for your business, which usually means better travel deals.
But aren’t the airlines making record profits?
Here’s where it gets interesting. Despite the drop in airfares, Qantas and Virgin have posted eye-watering profits.
Qantas Group’s earnings before tax soared to $1.5 billion in the last six months of 2024, and Virgin Australia also announced record profits. How is this possible?
The answer lies in a combination of factors. While fuel costs are down and more seats are available, demand for travel remains strong, especially on popular routes like the ‘golden triangle’ between Melbourne, Sydney, and Brisbane.
Prices have remained relatively stable on these high-demand routes because flights operate close to full capacity. Airlines also benefit from enhanced efficiency, optimised scheduling, and a focus on premium services that draw in higher-paying passengers.
Plus, let’s not forget that after the chaos of the pandemic, airlines have become experts at squeezing every last dollar out of their operations. They’re running leaner, smarter businesses—and it’s paying off.
What about international travel?
It’s not just domestic flights that are getting cheaper. International economy airfares out of Australia dropped by 5 per cent in January and February compared to the same period last year, while business class tickets fell by 3 per cent.
More routes are set to launch in the year’s second half, with Virgin’s new partnership with Qatar Airways adding extra competition to the ever-popular Australia-to-Europe corridor.
This increased competition is great news for travellers. As a Virgin Australia spokesperson said, ‘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.’
Of course, not every route is seeing the same price drop. The ‘golden triangle’ between Melbourne, Sydney, and Brisbane remains as busy as ever, so don’t expect huge bargains there.
While airfares to the United States (US) have fallen by about 3 per cent, some Australians are considering reconsidering their trip after reports of tourists being detained or deported by US border security.
According to Graham Turner, chief executive officer of Flight Centre, leisure travel bookings to the US dropped by up to 15 per cent in the first three months of the year, but this hasn’t had a significant impact on prices yet.
Have you managed to snag a bargain flight recently? Are you planning more travel this year, thanks to lower prices? Or have you had a different experience? Share your stories, tips, and questions in the comments below.
Also read: Qantas just launched one-week-only deals on Asian getaways starting at $517
