Inflation Index: Airfares remain below inflation despite airlines facing soaring costs

Key findings at a glance

• International economy fares fell 7% between the first half of 2023 and the first half of 2026
• Inflation rose 11% over the same period, according to the Reserve Bank of Australia
• International business class fares rose 4% – still below inflation
• Domestic economy fares rose 10% – also below the broader inflation rate
• Everyday goods rose faster than airfares, including apples (+35%), takeaway coffee (+25%), bread (+18%), milk (+14%) and fuel (+5%)
• Jet fuel prices surged more than 40% between February and June 2026 alone

About the Index

The analysis compares the cost of Flight Centre Corporate’s average booked airfares and general household goods from January to June 2026 against the same six-month period in 2023, widely regarded as the first full year of normalised travel following border reopenings and the end of pandemic-related disruptions.

FCM Travel and Corporate Traveller Global COO Melissa Elf said despite short-term fluctuations in pricing, airfares have largely tracked below inflation since the travel industry emerged from the disruption of COVID-19. 

"By comparing the first half of 2026 with the first half of 2023, we're able to get a much clearer picture of how airfare pricing has moved in a post-COVID environment. Australia rolled out COVID vaccines in 2021, international borders reopened during 2022, and 2023 was the first year we saw travel operating at normal levels again," Ms Elf said. 

According to the Reserve Bank of Australia, a basket of goods and services valued at $1 in financial year 2023-24 would cost approximately $1.11 in financial year 2025-26, representing an 11% increase over the period.

_{[1] https://www.rba.gov.au/calculator/}

How do airfares compare to everyday household costs?

While inflation increased by 11%, the cost of an international economy fare fell by seven per cent. Meanwhile, international business class fares rose by four per cent.

Domestic economy fares lifted by 10% over the same three years, still coming in slightly under the broader rate of inflation.

The analysis compared daily household items such as apples, takeaway coffee, bread, milk and fuel, revealing airfares had increased at a lower rate than almost all of them. Apples rose by 35%, takeaway coffee by 25%, a loaf of bread by 18%, a two-litre carton of milk by 14% and a litre of unleaded fuel by five per cent.

*Booked airfares across Flight Centre Corporate brands, FCM Travel and Corporate Traveller 

“It’s quite significant when you consider that during the same period the cost of things like milk, bread, fuel, coffee and apples have outpaced the rate of inflation and are costing as much as 35% more in 2026 than they were three years ago, in the case of a kilogram of apples,” Ms Elf said.

“Everything costs more to grow, produce, create and run today than it did a few years ago, and airlines face those same cost pressures.

"Airlines have continued to operate in a high-cost environment, particularly when it comes to fuel.”

What’s driving airfare pricing

Jet fuel prices surged more than 40% between February and June this year, creating immediate pressure on airline operating costs.

Ms Elf said airfares continued to be influenced by structural market factors rather than temporary cost spikes alone.

"While some of those increases were reflected in fares, competition, capacity and customer demand continue to shape pricing outcomes," she said. 

“Of course we go through temporary periods, like the recent middle eastern conflict for example, where we will see a swift hike in prices for a time, but history will show that over longer timeframes this balances out.

“Oftentimes, after a period of disruption, we’ll see carriers reduce prices again to encourage travellers back onboard because at the end of the day, they need passengers on their aircraft.

"What we're seeing now compared to three to five years ago is a more mature market balancing demand, competition, airline capacity and operating costs.

"That means there will continue to be periods where travellers see pricing pressure, particularly on popular domestic and international routes, but the longer-term picture is much more stable than many people assume."

What this means for business travel budgeting

Ms Elf said organisations that understand travel demand patterns and book strategically continue to gain an advantage.

"For businesses, travel budgeting is becoming less about managing extreme volatility and more about understanding market dynamics," she said.

"Travellers who plan ahead, avoid peak periods where possible and use data to inform decisions will generally achieve better outcomes.

"The encouraging result is that despite inflation affecting almost every aspect of daily life, airfare growth has remained relatively restrained, particularly for international travellers."

_{[12] ACCC Domestic Airline Competition report, June 2026: https://www.accc.gov.au/media-release/airlines-increase-airfares-and-reduce-flights-on-some-routes-as-fuel-costs-rise}