Mr Jardine said the main factor driving up international airfares was lower capacity compared to pre-COVID-19 levels.
According to government statistics, there were 45 per cent less international seats flown to and from Australia in August than at the same time in 2019.
Australia does deals with other countries that allow their respective airlines to fly to a maximum number of services to and from each other.
Old bilateral agreements ‘don’t work’
But Mr Jardine said the best way to solve the issue of capacity was to temporarily introduce an “open skies” agreement for up to two years that would allow carriers unlimited capacity to Australia.
CATO says it met with Tourism Minister Don Farrell last week to discuss the idea.
“We are asking government to allow airlines that have the will and capability to fly into major Australian hubs. Airlines need to be able to plan for new routes and opportunities with enough lead time to be able to service any market efficiently,” Mr Jardine said.
He said the old bilateral agreements “don’t work in the current environment”.
“An open skies agreement will provide the biggest single boost to the travel and tourism economy, help to boost exports through the availability of more freight capacity and help alleviate the labour shortages by enabling some 75,000 working holiday visa holders to actually travel to Australia,” he said.
Despite higher airfares, some airlines had yet to see an erosion of demand even as inflation and cost-of-living pressures circle.
Singapore Airlines regional boss Louis Arul said earlier this month that airfares would only start to fall again when airline capacity reached closer to pre-pandemic levels.
But, in the meantime, he said travellers seaking a deal should book as far in advance as possible to ensure they were paying the cheapest price.
“You’re seeing the airfares get higher sooner. In the past if you were to buy a ticket for December in March, you’d be able to get a good deal. But, today, people are buying, in March, tickets to travel in December already,” Mr Arul said.
“Airline systems are such that you only sell tickets 12 months in advance … and we’ve seen that people are buying all the way to that system end date and that is where you find the cheaper tickets.”
