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A dearth of competition has funnelled huge revenues to Qantas Group and Virgin Australia, the ACCC has said.
In its latest Domestic Airline Competition report, the competition watchdog said strong ongoing demand for flights, coupled with limited competition on domestic routes, has contributed to strong financial results for both major airline groups in the first half of 2024–25.
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Qantas Group posted pre-tax earnings of around $1.5 billion in the first six months of the financial year, of which more than $900 million came from its Qantas and Jetstar domestic operations.
Qantas Domestic, in turn, made up the lion’s share of this at $647 million, with the Flying Kangaroo having captured a crushing 80 per cent of the corporate travel market.
Jetstar, meanwhile, grew its earnings by 53.7 per cent, once again benefiting from being Australia’s only low-cost carrier after the collapse of Bonza in the first half of the 2024 calendar year.
“The high half-yearly earnings reported by Qantas Group reflect its dominance of the domestic airline sector, with Qantas and Jetstar accounting for over 60 per cent of passengers,” ACCC commissioner Anna Brakey said.
“Jetstar has been able to capitalise on the continued absence of competitive pressure from another low-cost carrier in the domestic market to increase its market share and operating margin.”
Virgin does not publicly report its half-yearly results, but has indicated a “record” profit for the first half of 2024-25 and now has 34.4 per cent of the domestic passenger market as of March, following the end of Rex’s domestic jet operations last year. The carrier has also taken on the leases of three former Rex 737-800s.
While average airfares dropped 16.1 per cent in the three months to January 2025, they crept back up by 9.6 per cent in the months to March, but still sit below their highs in October following the collapse of Rex.
“The trends observed in average airfares since January reflect seasonal factors and are broadly consistent with those observed in previous years. Average airfares have come down from their peak in October 2024,” Brakey said.
On-time performance has also steadily improved in recent months, and sat at 80.2 per cent on-time arrivals in March, just below the long-term average of 80.7 per cent, despite disruptions from Tropical Cyclone Alfred.
“It is encouraging to see the on-time arrival rate improving as this means travellers can have more confidence that their flight will arrive at the time they booked,” Brakey said.
Data from the federal government’s competition taskforce in January 2024 showed that adding more competitors on a route can dramatically slash airfares.
Dr Andrew Leigh, Assistant Minister for Competition, pointed to figures from the taskforce showing that airfares average 39.6 cents per kilometre on routes with only one carrier, 28.2 cents on routes with two carriers, and 19.2 cents with three.
“In other words, the price per kilometre is halved when three competitors fly a route compared with the situation when there is only a single monopoly airline. With four or five competitors, the price drops further still,” he said.
“Aviation competition has been fundamental to connecting Australian cities to one another and connecting our country to the world. Still, many Australians suffer from a lack of competition.
“For example, for a resident of Darwin, it is often cheaper to fly from Darwin to Singapore than it is to fly from Darwin to Sydney – even though the international flight is longer than the domestic one.”
