Qantas boss Alan Joyce explains why airfares are sky high

Qantas chief executive officer Alan Joyce has explained why airfares have reached sky-high levels this Christmas.

Joyce said the price hike is due to a range of factors, including increasing fuel prices and skyrocketing passenger demand.

“The ACCC [Australian Competition and Consumer Commission] does a report each quarter on the aviation industry, and they’re saying that airfares are around 27 per cent higher in October this year than in October in 2019, pre-Covid,” he said in an interview with The Sydney Morning Herald.

“A big driver of the price increase is fuel. We’ve paid $5 billion for fuel this year, which is the biggest fuel bill we’ve ever had.

“Secondly, demand is bigger than supply. It’s at unbelievable levels internationally and domestically because people were locked up for so long and everybody was surprised at how rapidly demand rebounded to be excess of what it was in 2019.

“And supply is difficult because, like every airline, it’s been hard getting those aircraft back in the air and the combination means that airfares are higher.”

So, when should passengers expect to see prices return to usual again?

Joyce said that while supply chain issues will ease in 2023, unfortunately the global situation remains too volatile to predict, especially when it comes to the war in Ukraine.

“Airbus and Boeing are telling us the supply chain issues should be fixed by the end of next year, which will get more planes in the air and airfares will come down as a consequence of that,” he said.

“But the fuel price issue remains and nobody knows what’s going to happen with things like the war in Ukraine, so it’s hard to know whether fuel prices will come back to 2019 levels.

“If they do, and you have the capacity getting back in line with demand, you’ll have airfares significantly coming down.”

The ACCC’s latest Airline Competition in Australia report revealed that discounted economy fares have increased the most, as airlines benefit from soaring demand.