Air fares plunge in era of thrifty travel

[NickN]

AIR FARES are at their cheapest in more than a decade as airlines discount tickets in a contest for budget travellers.

The managing director of Webjet, David Clarke, has calculated that international fares have fallen, on average, by 40 per cent, and domestic fares by about 20 per cent this year.

He said a range of factors had contributed to the bargains: a fall in demand for first and business class tickets, increased capacity, greater competition and a fall in the number of tourists travelling from countries such as the US.

But the main trend has been a shift in consumer sentiment. Passengers are hunting for budget tickets and are not willing to pay the normal fare.

This week Jetstar launched its fifth birthday sale. Two tickets to the Sunshine Coast are being sold for $69. Virgin Blue responded by launching the "It's not our birthday sale", selling tickets to Townsville for $125.

Return fares to Los Angeles are around $1000, down from about $2000 a year ago, while return tickets to London cost about $1500, down from $2500.

"A major discount on domestic air fares was launched on Wednesday morning and the reaction from the travelling community was absolutely instantaneous," Mr Clarke said. "By 9am, we were running at absolutely peak levels, so the market is very, very sensitive to bargains. It waits for them, it hunts them out."

Not long ago travel magazines and airlines were pitching to affluent young travellers, coining terms such as "flashpackers" to describe the spending frenzy.

But Mr Clarke said the defining mentality was that of thrift.

A Flight Centre spokesman, Haydn Long, said there has been a fall in demand for long-haul international flights.

Arrivals to Australia from the US fell by 2.6 per cent in February compared to the same period last year.

"Where we've most noticed the change is the premium long-haul, the top end of the market," Mr Clarke said. "The adventure market has been quite strong all year - those guys who are the backpackers and are not concerned about mortgages or job security."

While there is disagreement as to how long the discounting will last, Mr Long said current prices were unsustainable.

But for businesses, at least, the thrift mentality will be hard to shake. Linda Brettell, managing director of Sanford Travel in Double Bay, is working with a large number of her corporate clients to adjust to the recession.

She said there had been a significant reduction in first and business class travel and an increase in teleconferencing as an alternative to non-essential travel.

But Ms Brettell said there were some important caveats for businesses trying to cash in on airlines' race to the bottom, with strict conditions being placed on the discount fares.

"Companies are going best fare or the cheapest fare of the day, however it is not always in their best interest - companies need to consider the real cost," she said.

"Buying the cheapest flights and prepaying accommodation in full prior to travel leaves no flexibility for changes or cancellations and companies are forfeiting hundreds of dollars when travel plans change. Plus in the long run it removes companies' bargaining power with suppliers, not to mention lost employee productivity through spending hours trawling the internet."

http://www.smh.com.au/travel/air-far...0512-b1tw.html