Airfare volatility has emerged as the biggest concern for corporate travel buyers heading into the second half of 2026, according to a live poll of FCM Travel clients and prospective clients.
The poll was conducted at FCM’s Th!nk 2026 event at the InterContinental Sydney yesterday, where attendees were asked what worried them most heading into the remainder of the year. Airfare volatility came out on top, ahead of other options including data, and traveller pushback on policy.
Felicity Burke, Strategy Lead at FCM, put the question to the room.
“Heading into the next six months, or what’s left of 2026, what worries you the most? We’ve got some airfare volatility, we’ve got data, we’ve got travel pushback on policy,” Burke told attendees.
Burke pointed to a shift in how airlines are setting prices, noting the industry has moved away from a market share pricing model in favour of cost recovery.
“Both carriers are pricing based on cost recovery. They’re not pricing market share,” she said. “We’ve always seen the price for market share, and that’s not what’s happening.”
She said the change was tied directly to the cost of fuel, which she described as having a major impact on airline recovery timelines.
“The cost of fuel, the impact that it has on an airline – it takes an airline typically two years to recover from that cost impact,” Burke said. “We’re looking at a two-year recovery for a lot of the airlines.”
Burke said the fuel cost spikes driving the pricing shift had come in at roughly double initial forecasts for the year.
“It’s a two-year runway for the airlines to recover on these fuel spikes, which are pretty much double what we anticipated and forecast for this year,” she said.
Data presented at the event underscored the pressure on domestic fares. Australian domestic demand grew 2.1 per cent in February 2026, but passenger load factors – the proportion of available seats filled on a flight – fell to 79.3 per cent compared with the same month a year earlier, as capacity additions outpaced passenger growth. Both Qantas and Virgin Australia have announced targeted capacity cuts for the fourth quarter of FY26 to rebalance supply and restore yield. FCM Consulting is forecasting load factors to recover to 82 per cent in the second half of 2026, but expects fares to remain above pre-2026 levels.
Across the wider Asia-Pacific region, average purchased discount economy airfares have risen across every major domestic market in the first four months of 2026, led by China (up US$119) and Japan (up US$67), with Australia up US$38.
Despite the volatility, Burke said corporate buyers retained significant leverage with suppliers, given the guaranteed volume they represent.
“You are gold to our suppliers because you’ll be guaranteed business that they need when they’re pricing moving forward,” she said. “They want a price based on the fact that they’ll have a guaranteed bottom on the seat or a head on a pillow. So that is the goal that you bring to the conversation when you’re conducting your supply negotiations.”
On the ground, Burke said the unpredictability was already playing out on Australian domestic routes, citing fluctuating fares between Qantas and Virgin Australia as an example.
“It just feels like you can’t predict what tomorrow will bring,” she said. “I must admit, when I flew last week, it was cheaper to fly on Qantas than it was Virgin, and so you kind of go, okay, that’s a tell of what’s happening in the market.”
Fielding a question from the floor on the value of airline contracts amid the volatility, Burke said fluid, day-to-day pricing strategies from both carriers meant contracted rates remained important for corporate buyers, particularly on routes that rarely go on special.
“I think Virgin have their pricing strategy, Qantas have another one, but they’re both really smart to have fluid pricing,” she said. “You need a contract in place to leverage whatever savings you can get on those routes. So it is route specific, and you can’t time it.”
Asked whether Qantas might be leaning on last-minute fare drops to fill seats, in the way Chinese carriers famously did over a decade ago, Burke drew a comparison with that earlier precedent.
“The last-minute sale of tickets is something we saw in China 15 years ago, when all the airlines were flying everywhere,” she said. “Two days before, or two hours before the flight, the domestic specials that would come out just to get a bundle of seats was phenomenal. You literally stand at the airport and wait for the really cheap seats to drop.”
She said it was possible Qantas was applying a similar approach domestically to offload excess capacity, but cautioned that pricing strategy varied by carrier and by route.
“I kind of think, if what happened 15 years ago in the China domestic market could happen here, it’d be crazy,” she said. “It’d be awesome, we’d all be travelling a lot more.”
