The Tourism and Transport Forum Chief Executive Officer says that the current low domestic airfares are not going to last because the airlines will not be able to maintain them. According to Mrs. Wirth, who declined to speculate how long the reduced air fares would last, the current best available discount fares cost about half the price of what they used to cost in the mid 90s.
Typically, the numbers of passengers are dwindling and the carriers have to cut down on capacity to keep up with the trend, thus, airfares will have to escalate to a more rational level. Olivia says the most recent figures released for February indicate a pitiable drop of 5.3% in the number of domestic passengers. It is the first time in virtually seven years where an invariable month-on-month fall has been recorded.
The supply and demand equation is not a sustainable one in that even when the airlines are trying to offer extremely cheap airfares to instigate demand, there are other factors that still make the equation unbalanced. According to the TTF director, tourists today are opting to take shorter breaks to areas close to home for leisure – of course plummeting air travel demand. Olivia therefore ascertains that unless the demand comes back to normal, the airline will be forced to lessen the frequency of flights. Reducing the supply will therefore mean that when the demands gets back to usual, the fares will rise considerably.
Recent figures regarding 15 busiest domestic airlines, which were released by the Bureau of Infrastructure, Transport and Regional Economics show that passenger numbers had fallen awfully during the month of February. According to Mr. Peter Harbison, the chairman of the Centre for Asia-Pacific Aviation based in Sydney, cheap fares are projected to last for a slightly longer period, longer than some people have assumed.