Airfare relief: Why international travel has just become more attractive

Inside Jewel Changi Airport Mall. Singapore is a popular destination for Webjet customers this Christmas. Photo / Bloomberg

Inflation figures showing international airfare prices have dropped 12 per cent in the past three months comes as research shows New Zealanders are still eager to get overseas on holiday.

The Consumer Price Index eased to 6 per cent in the June quarter - the lowest annual rate of inflation in New Zealand since late 2021, with the transport sector down 7.8 per cent for passenger transport services, ASB economists say.

Within that, international fares (which had soared 17 per cent during the full March year) fell by nearly 12 per cent in the latest quarter, the largest fall since early last year.

Oil prices are down about 15 per cent from last year and this is typically the biggest component of airline expenses. More airline capacity is returning to New Zealand, driving competition, with Webjet figures showing some better deals coming in the leadup to Christmas.

In the United States, fares are also falling from high levels, according to data released this week by the Bureau of Transportation.

The average US domestic airfare decreased in the first quarter of this year to US$382, down 4.1 per cent from the fourth quarter of 2022.

Airline bosses in this region have forecast an easing in fares as more capacity returns.

Today, Jetstar put 15,000 international fares on sale with flights from Auckland to the Gold Coast starting at $159 and to Rarotonga from $175..

Auckland Airport this week said international travel has recovered to 87 per cent of pre-pandemic capacity this month. We expect this to increase further with a busy summer season ahead.

Auckland Airport now has 23 airlines flying to 39 destinations – up from 12 airlines and 21 destinations during the pandemic.

Numbers going on overseas holidays from NZ doubled in May. Photo / Grant Bradley

And more Chinese carriers are flying here. Before the pandemic, flights to and through China helped drive down overall fares and by the end of the year capacity between Auckland and China will reach 93 per cent of pre-pandemic levels.

“International travel has recovered to 87 per cent of pre-pandemic capacity this month. We expect this to increase further with a busy summer season ahead,” said Auckland Airport chief customer officer, Scott Tasker.

Auckland Airport now has five airlines operating 27 weekly flights to and from China, representing an 86 per cent recovery in capacity.

But demand remains strong and this will continue to put a floor under prices.

Stats NZ figures showed the number of New Zealanders returning after trips overseas in May doubled to more than 203,000 from the same month last year when overseas travel was just resuming.

This shows the number of New Zealand resident traveller arrivals for the year-to-date was 2.1 million, up from 1.8 million for the May 2022 year.

Strategic research agency Angus & Associates has been tracking leisure travel intentions in New Zealand and Australia since January 2021 and says more Kiwis are eyeing overseas trips.

Managing director Chris Roberts says while a domestic trip is still the more likely choice, a trend towards overseas holidays that has been evident for the past year picked up speed in the latest quarter (March-June).

Almost 3 out of every 10 New Zealanders surveyed say they are intending to travel overseas for leisure reasons in the next six months.

In the latest quarter, 57 per cent of New Zealanders were planning a domestic trip in the next six months, down from 64 per cent in the same period last year.

Some 29 per cent were planning to head overseas in the next six months, up from 21 per cent a year ago. Australia is the most likely destination (16 per cent up from 12 per cent), with 7 per cent looking at a Pacific Island holiday (was 5 per cent ) and 10 per cent heading further afield (up from 7 per cent).

Data from Webjet also shows that the Kiwi families are already planning for their next holiday at Christmas with family bookings up 64 per cent for the summer school holiday period (December 20 - January 29) year on year.

In 2023 so far, families are locking in travel plans earlier than usual, booking on average 64 days in advance, a significant climb from 52 days in the same period last year.

Interestingly, despite the cost of living, families are looking to jet further away for their Christmas break, with international and transtasman travel accounting for 64.5 per cent of family bookings in the summer school holidays, up from 25.9 per cent last year.

Webjet says that with five months to go, there are still plenty of bargains to be had.

Best indicative prices for top international return travel in December include: Auckland-Singapore from $1505, Auckland-Manila from $1695, Auckland-Hong Kong from $1600, Auckland-Bali from $1425 and Auckland-Amsterdam from $2345.