As the economy subdues, Australian domestic airlines are poised to discount flights given a fare war is inevitable, according to Centre for Asia Pacific Aviation founder Peter Harbison.
Fares are already near all-time lows and are expected to decrease further, according to the West Australian.
It's just a matter of how long and how deep and how many, Mr Harbison said.
The Department of Infrastructure and Transport recorded a 40 percent drop in the domestic business class fare index over the past 12 months.
Virgin Australias business class fares are the cheapest they have ever been on the Perth to Melbourne route.
Yields are predicted to continue to fall, given the markets domestic overcapacity.
Virgin has to add capacity but Qantas maintains its 65 per cent market share goal, Mr Harbison said.
Domestic overcapacity shows no sign of relenting as Qantas plans to increase mainline capacity by 9-11 percent to ensure it maintains its market share against an expanding Virgin Australia, the Centre for Aviation revealed in a recent report.
Qantas will take delivery of 35 aircraft over the course of this financial year, while Virgin Australia plans to introduce another four wide-body Airbus A330s in the next year.
Tiger Airways made a successful return from its grounding last year, increasing domestic services in Australia.
Source = e-Travel Blackboard: P.T