Aviation

Aussie air travel among world’s most expensive: study

Hannah Edensor

A new survey has shown that Australia is not exactly the cheapest country to catch a flight to – or from, for that matter.

OTA Kiwi.com has revealed the results of its second annual Flight Price Index, and the results show that Australia clocks in as the 69th most affordable country to fly from.

The average cost of a flight from Australia, per 100km, is $39.59, with Australia’s position on the list slipping by five spots, after it came in at number 64 in 2016.

Kiwi.com said the reason they create the Flight Price Index is “to help make travellers aware of countries that offer good opportunities for affordable travel”.

The OTA took into account short-haul and long-haul flights from 80 of the world’s most frequently visited countries and cities, calculating an average ticket cost per 100 km of travel, using high and low season flight costs for over a million journeys.

The research also makes a clear distinction between low cost and full service airlines to arrive at  a conclusive country to country price index.

Flying in Malaysia was shown to be the most affordable, with the average price per 100km of travel sitting at $5.63, while other countries keeping Malaysia company in the top 10 included Bulgaria, India, Turkey, Romania, Indonesia, Portugal, Thailand, Sweden, and Spain.

Check out the table here:

Rank Country Avg cost $US/100km
1 Malaysia 4.18
2 Bulgaria 4.65
3 India 4.96
4 Turkey 6.28
5 Romania 6.46
6 Indonesia 6.49
7 Portugal 6.50
8 Thailand 6.74
9 Sweden 6.96
10 Spain 7.08

 

So with Australia so far down the rank, which countries were more expensive than Australia?

Belgium was awarded most expensive air travel, coming in at 80th place with a cost of $73.55 per 100km travelled.

Rounding up the top 10 most expensive countries are the Netherlands, Qatar, Chile, United Arab Emirates, Solomon Islands, Serbia, Austria, Lebanon and Oman.

Kiwi.com’s CEO Oliver Dlouhý said, “Ticket prices fluctuate constantly for a myriad of reasons.

“Year on year changes can partly be attributed to fuel prices, sociopolitical shifts such as Brexit, recent elections and fluctuations in foreign exchange rates.

“The UK, for example, is seeing a larger number of Americans visit due to the weakening of the pound, whereas Egypt and Turkey saw a drop in ticket prices due to a decrease in demand due to regional turmoil.

“By tracking flight cost by country, travellers have more information with which to choose destinations that allow them to travel further on their budget. Travellers know what their ideal route, timing and price is, so we give them the tools to fulfil that.”

So why are Australian flights so expensive?

According to the ABC, higher labour costs are largely to blame.

“Labour costs make up about 30 per cent of total flight costs,” Dr Tony Webber, the CEO of Airline Intelligence & Research and a former Qantas chief economist, told the ABC.

Australian wages are also much higher than a lot of other companies – in particular the countries that came in the top 10 for affordable air travel.

Per the ABC, the International Labor Organisation (ILO) found that Australia’s average wages have grown by 10 per cent over the past 10 years.

By comparison, American wages only grew by about five per cent, while wages declined in Japan, Italy and the UK by two, six and seven per cent, respectively.

But pop across the Tasman, and our neighbours in New Zealand are doing a hell of a lot better in terms of flight affordability, coming in at a crazy low 17th place.

But it comes down to labour costs, with Dr Webber telling ABC, “New Zealand’s labour unit costs are lower than Australia, around 20 per cent, and they have more aggressive domestic competition.

“Whereas Air New Zealand used to be a monopoly, they are facing more intense domestic competition from Jetconnect.

“There is also very strong competition in the Tasman — to and from Australia.”

The ABC claims there does appear to be some correlation between a country’s wage levels and growth and flight prices.

However, the competition – or lack of – in Australian air travel could also be part of it.

“Australia will be quite expensive relative to other countries because we have a more concentrated aviation market,” Dr Webber told ABC.

“It’s a duopoly in the Australian domestic market — dominated by Qantas and Virgin.”

Over in the US, where flight affordability saw the country land in 30th spot compared to Australia’s 69th spot, the airline market is far more competitive.

According to Dr Webber, another factor driving up Australian flight prices is the lack of airport options for passengers.

“Australia has a small but sparse population, and our airports are very concentrated,” he told the publication.

“Effectively, Sydney and Melbourne airports are monopolies.”

Hold this up against other western markets like the US and UK, where for example, London has six separate airports, and New York has three.

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