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Airfares dip after a big September rise

AAP logoAAP 13/10/2016 Tom Rabe

It could pay to keep an eye on global oil prices when booking your next trip.

Discount airfares have dropped almost 16 per cent in October after rising 27 per cent in September, which was the largest monthly rise in almost three years, according to government data.

That movement reflects recent volatility in oil prices, and shows airlines are attempting to lift prices to cover higher jet fuel bills, and to boost their margins, Commsec chief economist Craig James says.

Competition is restraining price hikes though, and airfares remain at historically low levels, he said.

But prices may be beginning to creep up.

"If there was to be an inflationary impulse coming through from the global economy, more than likely it would come through the oil or energy sector rather than anything else," Mr James told AAP.

Consumers should therefore not become complacent, and do their research.

"Airlines are wanting to ensure they get the best margins of profitability to provide benefit to the shareholders and with that sort of environment they're going to look for every opportunity they can to pick up fares," Mr James said.

While discount airfares have fluctuated, the Bureau of Infrastructure, Transport and Regional Economics reports that business class airfares have been relatively stable.

They have fallen just 0.5 per cent in October, and are up 6.5 per cent from 12 months earlier.

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