Domestic air fares increased following the Anda new report from the Australian Competition and Consumer Commission (ACCC) reveals.
Here are the other takeaways from the major report on domestic airline competition in Australia, released on Tuesday.
Rex’s collapse had a big impact
After and canceled its flights between capitals, flight prices have soared on these routes.
Qantas and Virgin were charging customers more because they no longer had competition, the ACCC said.
Prices on the Adelaide-Melbourne route have increased by 95 per cent, the Melbourne-Gold Coast route by 70 per cent and ticket prices from Canberra to Melbourne have increased by 54 per cent.
Real average revenue per passenger on these routes increased by 13.3 percent between July and September.
This increase also coincided with an increase in seasonal demand in September and more full flights.
The number of seats available on major capital city routes fell by 6 percent when Rex left the market. However, passenger numbers have remained relatively stable, meaning flights are fuller, the ACCC found.
Costs will remain high without additional carriers
The report warns that Rex’s exit from the capital market “could also have significant lasting impacts on the domestic aviation sector”, as Qantas and Virgin (which currently hold two-thirds and one-third of the capital respectively) market shares) would have no incentive to do so. lower prices without competitors.
A Treasury working paper found that having an extra airline on a route can reduce airfares by 5 to 10 per cent.
Additionally, as each additional airline is added, prices drop even further, sometimes by more than 15 percent.
When a route is served by a monopoly carrier, passengers pay around 40 cents per kilometer, falling to 28 cents when two airlines are present and 19 cents for three airlines.
Qantas, the worst airline for cancellations
Flight cancellations and delays have fluctuated over the past 12 months.
At 2.1 percent in May, the industry average cancellation rate outperformed the long-term industry average cancellation rate of 2.2 percent for the first time since October 2020.
The industry average cancellation rate worsened to 3 percent in July, but has since improved to 2 percent in September.
Qantas was the only airline to perform below the industry average, recording a cancellation rate of 2.8 per cent in September.
Rex flights were most often on time in September, at 76.6 per cent, followed by Qantas at 76 per cent, Jetstar at 74 per cent and Virgin Australia had the fewest flights on time at 73 per cent.
The sector’s average on-time arrival rate improved slightly, from 71.1 percent in July to 75.5 percent in September. This figure, however, remains worse than the long-term average of 80.8 percent.
Passenger numbers remain below pandemic levels on some routes
Melbourne to Sydney remains the busiest route with more than 614,000 passengers, or 12.5 percent of all domestic passengers.
On the most popular routes, known as the Golden Triangle, linking Brisbane, Melbourne and Sydney, passenger numbers increased, with two of the three routes surpassing September 2023 levels.
However, when comparing September 2024 to September 2019, only seven routes were above 100% of pre-pandemic passenger levels, including six routes to and from the Gold Coast and Perth.
None of the Golden Triangle routes exceed this level.
International travel increases
More people are traveling abroad and prices are getting cheaper, the review notes.
The cost of an international economy class air ticket from Australia has decreased by an average of 5-10% between July-September 2023 and July-September 2024.
Flights to the United Arab Emirates, Qatar, France, the United Kingdom and Italy saw the biggest drop in fares.
The Australian Bureau of Statistics shows total arrivals and departures to and from Australia increased by 7.2 percent and 11.7 percent respectively in the 12 months to August 2024.
Short-term arrivals to Australia increased by 9.2 per cent during this period, with all states and territories seeing growth, particularly South Australia and Western Australia.
In response to growing demand for international travel, several Asia-based airlines, including Philippine Airlines and Thai Airways, have increased capacity in Australia beyond pre-pandemic levels and see potential for further expansion .
