A strengthening economy and strong Aussie dollar may have contributed to the five percent increase in domestic fares across Australia last year compared to the prior year.

An American Express evaluation of Asia Pacific and Australian fares found that across all classes Australian fares escalated by three percent last year over 2010.

American Express Advisory Services head of Asia-Pacific region Dr Carl Jones explained the fare increase in the domestic sector emphasised higher demand for business activities in the sector.

“In Australia, domestic travel continues to be the focus as companies develop local market activities,” Dr Jones explained. 

“Local carriers have also pushed fares up, which has driven price increases both over the course of the year and in the last quarter.”

Dr Jones said competition within the market is also cause for the extra price in flying.

“With the introduction of more competition in the business class market in 2011, fares in this category have leveled both in the last quarter and compared to the same period in 2010.”

Meanwhile, flights between Australia and Europe managed to fall despite the increase, with a three percent drop for the year, citing the rough economy as the cause for decline.

Across the Asia-Pacific region fares across the board jumped up two percent for the last quarter of 2011 compared to the corresponding period 2010.