Australians are being warned that air travel could remain volatile for some time, as rising fuel costs and geopolitical tensions continue to disrupt routes and reshape demand. Despite the pressure on operating costs, major airlines are also releasing millions of discounted fares in a bid to stimulate bookings, adding fresh uncertainty for travellers.
In Australia, that mix of higher prices, fare sales and shifting flight paths has left some passengers weighing up whether to chase savings, even if it means transiting through or near conflict-affected regions. Middle Eastern airlines, in particular, have reported steep drops in passenger numbers amid ongoing tensions involving Iran. In response, some carriers have slashed fares on popular routes — including flights to several European destinations — in a bid to stimulate demand.
But Dean Long, chief executive of the Australian Travel Industry Association, told Yahoo News Australia that while the discounts may look attractive amid ongoing cost-of-living pressures, travellers need to be aware of the risks and conditions attached to such deals.
“Australians need to understand what travel advisories actually mean in practice,” he said. “‘Do not travel’ to a transit country means no insurance coverage while you’re in that destination, even if you’re only in the airport for two hours.”
Too many people discover that after the fact, Long said. He strongly suggested Australians check with the Department of Foreign Affairs and Trade (DFAT) before booking.
“Understand what it means for your cover, and talk to an accredited travel agent or tour operator who can route around those risks,” he said.
Market is ‘adjusting, not breaking’
While Long said Australians may feel like flying has become more expensive and less predictable, he argued the underlying market is still adjusting rather than breaking. Fuel costs, he noted, are a genuine driver of higher fares, with both Qantas and Virgin facing significant increases in operating expenses.
At the same time, airlines are actively competing for demand through large-scale fare sales, suggesting the market remains functional rather than fractured.
“Qantas is facing an $800 million fuel bill blowout. Virgin has flagged a $40 million hit. Those are genuine external pressures,” he said. “But airlines also make strategic choices about capacity and pricing. The fare sales this week — Qantas putting two million discounted seats on the market, Virgin tickets from $55 — show competition is still functioning.”
“Don’t assume the first fare you see is the only one available.”
Justin Brownjohn from RMIT’s Aviation Academy said it’s an “interesting time” for airlines operating in Australia.
“In one part of the market, we have a large disruption to fuel oil supply chains, causing the cost of jet fuel to increase rapidly. In another, there is a cost-of-living crisis causing the travelling public to rethink their well-deserved holidays, which is causing the discounting of fares,” he said.
Airlines push aggressive fare strategy
Although the Australian public is used to seeing fares increase due to reduced capacity, right now, Brownjohn argued, we are seeing airlines “actively trying to attract passengers and feed them to parts of their network that are struggling”.
“This is not just a simple sale to fill seats,” he said. “This is an attempt to shift capacity to ensure routes are sustainable to ride out the current turbulence, but also to create availability elsewhere in the system where higher fares from more price-elastic consumers can be commanded to offset the losses elsewhere.”
“There is a reason revenue management is sometimes called the dark arts of aviation. Available inventory is always being optimised to gain the most yield. Once a flight departs and that seat is empty, it is spoiled revenue the airline can never get back.”
That balancing act between rising costs and aggressive pricing strategies is also feeding into broader shifts in airline networks. Some routes have already been suspended, particularly in regional Australia, while forward bookings in certain areas have softened significantly.
“Four regional routes have been temporarily suspended, and regional operators are reporting forward bookings down as much as 40 per cent — that’s a real community impact,” Long said. “This is restructuring, not collapse, but it has real consequences for regional communities that deserve a policy response.”
