Rising costs of living and airfares point to long-haul travel being affordable for fewer people. It also might re-shape the way we think about tourism.
Australians need to brace for a reality check. When it comes to international travel, we’ve had it too good for too long.
After years of cheap flights to all corners of the globe, market reality has hit and we’re in for a bone-shaking landing.
That will mean a fundamental shift for the visitor economy. And the good news is, Australia stands to cash in.
Since the pandemic, airfares have re-adjusted and tightened. On average, airfare costs comprise approximately 30 to 35 percent for jet fuel, 30 to 35 percent for labour and the remainder for aircraft leasing, purchases, administration, and other overheads.
Geopolitical events, such as the conflict in Ukraine and tensions in the Middle East, have led to a spike in jet fuel prices. Simultaneously, an inflationary economy, fuelled by post-pandemic spending, is driving up costs.
Global pilot shortages have resulted in substantial pay increases, further inflating expenses. Additionally, logistical disruptions from the pandemic have hindered aircraft manufacturing, reducing supply. Airlines are also willing to cash-in after significant losses during the pandemic years.
Consequently, we’re witnessing an inflationary trend, with flying becoming increasingly costly amid reduced aircraft availability.
Airlines are prioritising newer and more sustainable aircraft models, exacerbating supply-demand imbalances. These interconnected factors contribute to the escalating costs of air travel.
It appears that flying is transitioning into a luxury experience, particularly for long-haul journeys.
Australia could strategically position itself in response. Rather than pursuing continuous growth in international visitor numbers, the focus may shift towards attracting longer-staying, higher-spending tourists who are willing to travel beyond the usual and iconic destinations. This strategy can maximise economic benefits.