International economy airfares are actually cheaper than they were three years ago, despite Australians being slugged with rising prices almost everywhere else.
Flight Centre Corporate’s latest Airfare Inflation Index has revealed international economy fares fell seven per cent between the first half of 2023 and the first half of 2026, even as broader inflation climbed 11 per cent.
But travellers flying closer to home haven’t been quite so lucky.
Domestic economy fares increased 10 per cent over the same period, from an average $394 one-way fare in 2023 to $434 in 2026.
International economy fares, meanwhile, dropped from $989 to $915, while international business class fares increased a comparatively modest four per cent, from $4,553 to $4,747.
Airfares versus your morning coffee
Perhaps most surprisingly, Flight Centre Corporate’s figures suggest airfares have escaped some of the price increases hitting Australians at the supermarket and café.
While international economy fares fell seven per cent, the price of apples jumped 35 per cent, takeaway coffee rose 25 per cent, bread increased 18 per cent and two litres of milk climbed 14 per cent.
Even the 10 per cent increase in domestic economy fares came in just below the 11 per cent broader inflation increase cited in the index.
FCM Travel and Corporate Traveller global COO Melissa Elf said the figures were significant given the cost pressures airlines themselves have faced.
“Everything costs more to grow, produce, create and run today than it did a few years ago, and airlines face those same cost pressures,” Elf said.
“Airlines have continued to operate in a high-cost environment, particularly when it comes to fuel.”
Jet fuel prices surged more than 40 per cent between February and June this year, according to the index, putting immediate pressure on airline operating costs.
Why haven’t international fares followed costs up?
Elf said competition, airline capacity and customer demand continued to influence what passengers ultimately paid, rather than higher operating costs automatically translating into higher fares.
Temporary disruptions can still send prices sharply higher, with Elf pointing to the recent Middle East conflict as an example, but she said fares tended to rebalance over longer periods.
“Oftentimes, after a period of disruption, we’ll see carriers reduce prices again to encourage travellers back onboard because at the end of the day, they need passengers on their aircraft,” she said.
“What we’re seeing now compared to three to five years ago is a more mature market balancing demand, competition, airline capacity and operating costs.”
For businesses, Elf said the shift meant travel budgeting was becoming less about navigating extreme volatility and more about understanding the market and booking strategically.
“The encouraging result is that despite inflation affecting almost every aspect of daily life, airfare growth has remained relatively restrained, particularly for international travellers,” she said.
