Inflation Index: Airfares remain below inflation despite airlines facing soaring costs
Sydney, Australia, 18 September 2026 – Flight Centre Corporate's annual Airfare Inflation Index has revealed that international economy fares are lower than they were three years ago, despite inflation rising 11 per cent across the economy.
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 per cent increase over the period.
While inflation increased by 11 per cent, 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 per cent 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 per cent, take away coffee by 25 per cent, a loaf of bread by 18 per cent, a two-litre carton of milk by 14 per cent and a litre of unleaded fuel by five per cent.
“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 per cent 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.”
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 per cent, take away coffee by 25 per cent, a loaf of bread by 18 per cent, a two-litre carton of milk by 14 per cent and a litre of unleaded fuel by five per cent.
“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 per cent 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.”
Jet fuel prices surged more than 40 per cent between February and June this year, creating immediate pressure on airline operating costs.