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Cheapest economy airfares more than doubled on some routes after collapse of Rex flights


The average domestic airfare increased by 13% after the collapse of Rex flights between capital cities, the consumer watchdog has found, as Qantas and Virgin’s duopoly surged to 98% market dominance.

The Australian Competition and Consumer Commission (ACCC) found that since Rex suspended operations across 11 routes and entered administration, the average airfare on all major city routes increased by 13.3% in the quarter to September.

The average cheapest economy tickets increased dramatically on routes formerly serviced by Rex: Adelaide-Melbourne jumped 95% to $296; Melbourne-Gold Coast was up 70% to $432; and Canberra-Melbourne rose 54% to $298.

Four operators competed on the Melbourne-Gold Coast route before low-cost carrier Bonza’s collapse – now just two remain.

The price index for best discount airfares also rose sharply on several holiday routes, with Canberra-Gold Coast tickets rising 171% over the quarter to $490; Brisbane-Hamilton Island up 122% to $871; and Cairns-Sydney up 43% to $380.

Flights are fuller after Rex’s exit, with the number of seats on capital city routes falling by 6% despite passenger numbers remaining stable, according to the ACCC’s latest domestic airline monitoring report.

The ACCC commissioner, Anna Brakey, said the 13% average spike in airfares corresponded with “a less competitive domestic airline sector”.

Despite jet fuel prices falling by 41% in the 12 months to September, domestic airfares have remained steady. Meanwhile, average international airfares departing Australia decreased by 5-10% in the same period, the ACCC said, citing data from Flight Centre.

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Qantas attempted to play down the department data the ACCC report relied on, claiming a surge in demand from a Coldplay concert in Melbourne artificially inflated advertised airfares.

“It is a snapshot of the lowest fares available to purchase on a particular day three weeks prior to travel and does not factor in events which may impact demand and fares,” the Qantas domestic CEO Markus Svensson said.

Brakey noted the airline sector had become drastically less competitive following the collapse of Bonza and Rex’s jet operations in 2024.

“This in turn has contributed to higher airfares,” she said.

Earlier this year, almost half of all passengers flew on routes with either three or four airline groups, the ACCC said. But by November, no domestic route is serviced by more than two major airline groups, with Qantas Group (including budget operator Jetstar) and Virgin Australia servicing 98% of domestic passengers.

The ACCC also cited Treasury research which found Qantas Group’s size means its behaviour “strongly determines” the overall market. It found Qantas reduces airfares when a rival airline enters one of the routes it operates on.

However, when Qantas Group enters Jetstar as a budget option on a route it already services, the company increases the airfares of its premium carrier.

“The domestic airline industry has become even further concentrated, and it may be some time before a new airline emerges to compete on popular services between metropolitan cities, with normal barriers to entry and growth exacerbated by aircraft fleet supply chain issues and pilot and engineer shortages,” Brakey said.

Meanwhile, the future of regional carrier Rex remains uncertain.

On Tuesday, the government announced an additional $80m to help finance its scaled-back regional operations, as its administration period to find a new buyer is set to be extended until June.

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The CEO of Accommodation Australia, James Goodwin, said Rex’s woes and the lack of airfare competition was harming the accommodation sector.

“Consumers (are) reluctant to make forward bookings despite the government guarantee,” he said.

Also on Tuesday, Qantas told a Senate committee it does not expect government reforms proposed to boost competition at Sydney airport will loosen its hold on slots at the airport.

The Senate committee is canvassing feedback into reforms proposed by Labor in February to amend laws which limit Sydney airport to 80 take off and landing movements – known as slots – per hour.

Despite the scarcity of slots, allocation at Sydney airport follows the global standard, which allows an airline to retain its slot so long as it doesn’t cancel a service more than 20% of the time.

Scott Charlton, the CEO of Sydney airport, told the committee the global 80:20 rule is actually more generously applied in Australia, because cancellations due to inclement weather are exempt from the threshold.

The ACCC and others have long accused Qantas and Virgin of strategically spreading their flight cancellations in and out of Sydney to avoid cancelling any service more than 20% of the time.

Qantas and Virgin have consistently denied they engage in so-called “slot hoarding”. However experts point to the airlines’ cancellation rates that near 10% some months for routes out of Sydney to Melbourne, Brisbane and Canberra, while airlines such as Rex sometimes had zero monthly cancellations on such routes.

The proposed reforms do not tighten the 80:20 slot cancellation “use it or lose it” rule, something Sydney airport had itself called for.

On Tuesday, Svensson told the committee Qantas was likely to support the proposed amendments – pending final details – in part because they appeared to help airlines recover after delays due to weather.

He also said the airline did not expect to lose any of its unused or underutilised slots into Sydney airport as a result of the amendments – casting doubt as to whether the reforms, which the government frequently cites in response to criticism about its relationship with Qantas, will be effective.

“We do not apply for slots without having intention to operate them. I categorically deny that the slots are hoarded and [that we’re] trying to play any games here,” Svensson said.



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