CHART: Australia's air fare war is over, and domestic flight price rises are coming

File photo: Getty / Don Arnold

Air fares in the Australian domestic market are steadily increasing, according to analysis of travel bookings by Deutsche Bank.

“Our analysis of forward fares in the domestic market points to steady price increases,” says Deutsche Bank in a note to clients.

Economy fares are up about 10% and Business fares only showing slightly less growth.

Part of the reason is that Virgin and Qantas appear to have stopped their capacity war and are filling more seats with fewer discounted fares.

While Virgin and Qantas are seeing good rises, Jetstar prices are rapidly turning higher, as this chart shows:

Jetstar forecast

The rises are forecast to continue into the fourth quarter of 2015 and the first quarter of 2016.

And Deutsche Bank says its booking system analysis also points to domestic capacity growth into the second half of 2016.

“We believe this is supportive of a recovery in domestic aviation profitability,” Deutsche Bank says.

Growth in international fares is more subdued.

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