Domestic airfares in Australia have hit the highest level in five years, and Western Australia may be partly to blame.
Analysis by Moody’s ratings agency shows that the price rise is partly due to the reduced frequency of flights to WA. The size of aircraft used for flights out west has also decreased as the WA economy stalls as part of the fallout from the end of the mining boom.
This chart shows the rise in prices:
According to Moody’s, “the airlines’ strategy reflects a contraction in capital investment in the mining and resources sector, much of which is based in Western Australia, over the past three years”.
Moody’s outlook for the aviation industry in Australia is still relatively bright. The agency forecasts moderate growth in the domestic market for both airfares and traffic volume through to the end of the 2017 financial year, which will flow through to higher revenues for Qantas and Virgin.