Long-haul flights from Australia have rarely been so cheap
Author: Clive Dorman
A thousand dollars gets Australian travellers a long way at the moment, and the bargains are set to continue next year as airlines and flyers share a rare alignment of good fortune.
Jet-fuel prices have halved since 2014, delivering windfall savings to airlines, cutting as much as 20 per cent from the operating cost of every seat. At the same time, intensifying competition between carriers on routes between Australasia and the United States and Europe has brought rarely seen bargains to long-haul flyers.
Airlines are also beginning to bank dividends on investments made nearly a decade ago in next-generation fuel-efficient technology and aircraft. Boeing's 787 Dreamliner and the Airbus A350, for example, are flying long-haul routes with the same per-seat cost efficiency of the much larger Boeing 747 workhorses they are replacing. The advent of the Dreamliner, in particular, has been a key factor in the flurry of new competition on trans-Pacific routes to the US.
The latest wave of bargains between Australia and the US began a year ago when American Airlines launched a daily Boeing 777-300ER service between Sydney and Los Angeles. Rather than battle its codeshare partner, Qantas withdrew a daily 747 return flight from the Sydney to Los Angeles route and reactivated its Sydney to San Francisco service, which it abandoned in 2011 when it decided to focus on its then-new west coast bypass from Sydney to Dallas.
Nevertheless, the new American Airlines LAX flights flattened fares on Australia to US routes by boosting the number of daily one-way seats linking the two countries by about 110,000 a year (around 10 per cent). United Airlines also resumed direct flights between Melbourne and Los Angeles and has launched Auckland to San Francisco direct flights, while American Airlines has launched a daily Auckland to Los Angeles service - all with Dreamliners.
The trans-Pacific competitive landscape has been redrawn in the past 10 years. A decade ago, Qantas and Air New Zealand were the only rivals to a crippled United Airlines, which was technically bankrupt as a result of the travel recession triggered by the September 11 terrorist attacks.
Back then, return fares from Australia to the US west coast hovered around $2,000, and there was little change from $3,000 for flights to the US east coast.
All that changed in 2008 when Virgin Australia, using a subsidiary then named V Australia, won the right to compete with Qantas and United on Australia to US routes with its new Boeing 777-300ERs. V Australia and its future partner Delta Airlines launched Sydney to Los Angeles routes in 2009.
The glut of seats was a bonanza for travellers. Australia to US return fares from Melbourne, Sydney and Brisbane plummeted to below $900.
By 2014, the market had digested the competition and fares edged back to $1,400 to $1,600. With a flurry of new competition this year and more than 200,000 extra Australia-US return seats to fill, bargains as low as $900 have returned.
For the first time, however, fares to the US east coast are also being discounted heavily. Return fares from Australian gateways to New York for about $1,050 have been advertised recently by Australia's biggest travel retailer, Flight Centre.
There are eight airlines flying direct routes to the US - four American carriers (Delta, United, American, Hawaiian) and four Australasian (Qantas, Virgin Australia, Air New Zealand and Jetstar) - and competition is furious at both ends of their planes as they seek to attract the corporate flyers who represent their future profits.
In the past two years there have been business-class revamps by Virgin Australia, Qantas, Air New Zealand, American and Hawaiian; United and Delta have announced that business-class makeovers are on the way.
The cheapest fares between Australia and Europe, meanwhile, stuck for years at $1,500 to $1,800 return, have plunged in the past six months to just above $1,000 return - and that's on full-service airlines.
That's not much more than the bargain-basement $800 return flights offered soon after the global financial crisis by no-frills AirAsia X from Australia to Paris and London; they were abandoned in 2012.
Competition among low-cost carriers from Australia to Europe is set to intensify next year. Singapore's Scoot Airlines will fly Dreamliners to Athens and another as-yet-unannounced European city in 2017; and AirAsia X has announced it will begin flying the first of a new fleet of Airbus A330neo airliners ("neo" stands for new engine option) to London in 2018.