Qantas claims 74% market share in December

Despite Qantas’ dominance, the competition commission’s chair, Rod Sims, said the rivalry with Rex and Virgin is helping to drive down prices.

“Australia’s domestic airlines are starting to experience a recovery in their passenger numbers, but it remains a very challenging environment,” Sims said.

“Domestic airfares normally peak over holiday periods but we didn’t see that happen in December, partly because the three airline groups offered competitive promotions in a bid to get customers back in the skies.”

The confirmation of the flag carrier’s strengthened position comes after repeated comments from chief executive Alan Joyce that his business would take at least 70 per cent of the domestic industry when the pandemic recedes.

In December, Joyce told Australian Aviation, “The first thing we have to say is that obviously, the market has changed through this year. Our major competitor, Virgin, has handed back a lot of aircraft, A330s, ATRs and some of their 737s so they are going to be significantly smaller than they were before COVID.

“We’ve also seen a significant move of demand towards Qantas. We mentioned the 25 corporate accounts that have moved across to us in the last year. I haven’t seen anything of that scale, ever. So we know the corporate market is moving for Qantas.

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“And we can see with Jetstar, certainly with Tiger removed from the market, that the low-cost market is moving towards Jetstar, too. So we also believe that there’s been a big strategic advantage for Qantas by having a bigger network of more frequencies.”

The news significantly comes hours after Virgin Australia chief executive Jayne Hrdlicka announced the airline will lease eight or nine more 737s to expand its domestic capacity.

The move comes as a surprise given new owners Bain said last year it intended to downsize the business’ 737 fleet from 85 to 56 and also axe its ATR, Boeing 777, Airbus A330 and Tigerair Airbus A320s altogether.

On Wednesday, Chief executive Jayne Hrdlicka told the Sydney Morning Herald she believed the domestic market was now “moving off life support”.

“We are committing to more aircraft and we are just really positive about the outlook,” Hrdlicka added.

The move appears to be prompted in part by a spike in ticket sales last week when the government announced it would supplement 800,000 half-price fares.

“I think what we saw … was consumers going: oh fantastic, the government is encouraging everybody to get out and about because it’s safe to do that. There’s a lot of pent-up demand – Australians just wanting to get out of the house and get back to normal, and have the opportunity to travel.

Today’s ACCC report is the third into the aviation industry in response to a request by Treasurer Josh Frydenburg in June last year.

The commission was set up to look for “early signs of damage” that could “damage a competitor or drive them off route”.