Airfare Waivers: Why International Travel Is Just Getting More Attractive

Inflation figures have shown international airfares have fallen by 12 per cent over the past three months, with research showing Kiwis are still eager to holiday abroad.

The consumer price index fell slightly
ASB economists said inflation fell to 6% in the second quarter, New Zealand’s lowest annual rate since late 2021, with passenger services in the transport sector falling by 7.8%.

Among them, international fares, which surged 17% throughout March, fell nearly 12% in the latest quarter, the biggest drop since early last year.

Oil prices, usually the biggest component of airline spending, are down about 15% from last year. More airline capacity is returning to New Zealand, driving up competition, with data from Webjet showing some better deals ahead of Christmas.

In the U.S., fares are also down from their highs, according to figures released this week by the Department of Transportation.

The average U.S. domestic airfare fell to $382 in the first quarter of this year, down 4.1% from the fourth quarter of 2022.

Airline bosses in the region expect fares to decline as capacity resumes.

Today, Jetstar is launching 15,000 international fares, with prices starting from $159 for flights from Auckland to the Gold Coast and $175 to Rarotonga.

Auckland Airport said this week that its international travel capacity had returned to 87 per cent of its pre-pandemic capacity this month. We expect this to increase further with the upcoming busy summer season.

Auckland Airport currently has 23 airlines flying to 39 destinations, compared to 12 airlines and 21 destinations during the pandemic.

More and more Chinese airlines have also launched flights here. Flights to and from China before the outbreak helped bring down overall fares, with capacity between Auckland and China set to reach 93 per cent of pre-pandemic levels by the end of the year.

“International travel capacity has returned to 87% of pre-pandemic levels this month. We expect this to increase further as we head into the busy summer season,” said Scott Tasker, chief customer officer at Auckland Airport.

Auckland Airport currently has 5 airlines operating 27 weekly flights to and from China, with 86% capacity restored.

But demand remains strong, which will continue to support prices.

Figures from Statistics New Zealand show the number of Kiwis returning home after overseas travel doubled to more than 203,000 in May from the same month last year when overseas travel just resumed.

This represents 2.1 million New Zealand resident visitor arrivals so far this year, up from 1.8 million in May 2022.

Strategic research firm Angus & Associates has been tracking leisure travel intentions in New Zealand and Australia since January 2021, and says more Kiwis are considering overseas travel.

Managing director Chris Roberts said while domestic travel remained the more likely option, the overseas holiday trend evident last year accelerated in the latest quarter (March to June).

Nearly three in 10 New Zealanders surveyed said they intended to travel overseas for leisure reasons within the next six months.

In the latest quarter, 57 per cent of Kiwis planned to travel domestically within the next six months, down from 64 per cent a year earlier.

Some 29 percent planned to travel overseas in the next six months, up from 21 percent a year ago. Australia was the most likely destination (up from 12% to 16%), with 7% considering a Pacific island vacation (up from 5%) and 10% wanting to go further afield (up from 7%).

Webjet’s data also shows Kiwi households are already planning their next Christmas break, with household bookings for the summer school holiday period (20 December to 29 January) up 64 per cent year-on-year.

Since 2023, families have locked in their travel plans earlier than usual, with an average of 64 days in advance booking, a sharp increase from 52 days in the same period last year.

Interestingly, despite the high cost of living, many families are looking to fly further afield for the Christmas break, with international and trans-Tasman trips accounting for 64.5 per cent of school summer holiday family bookings, up from 25.9 per cent last year.

With five months to go until it hits the market, Webjet says there are still plenty of bargains to be had.

Best reference prices for top international round trips in December include: Auckland-Singapore from $1505, Auckland-Manila from $1695, Auckland-Hong Kong from $1600, Auckland-Bali from $1425 and Auckland-Amsterdam from $2345.