The duopoly between Qantas and Virgin Australia in domestic travel has led to poorer service and higher prices, according to a new report by the Australian Competition & Consumer Commission (ACCC).
The report also found domestic flights were being cancelled or delayed more often in April than at the start of the year.
The Qantas and Virgin duopoly
Qantas and Virgin carried 94% of domestic passengers in April 2023. This includes Jetstar, which is owned by Qantas.
The ACCC suggested the expansion of Rex and introduction of new airline Bonza could alleviate the current duopoly. The emergence of these two airlines positioned the industry at a “critical point” for competition among domestic airlines.
Rex and Bonza would need to succeed with current plans and expand further to disrupt the Qantas and Virgin duopoly.
Delays and cancellations
About 4% of domestic flights were cancelled in April, almost double the long-term average. Jetstar had an industry-worst cancellation rate of 8.1%. This was followed by Qantas (3.3%) and Virgin (3.1%). Bonza, in its early stages of operation, cancelled less than 1% of flights.
About 28% of flights were delayed, which was also worse than the long-term average.
Airfares have continued to fall this year, following high demand in 2022.
Cheaper jet fuel, greater customer concern about rising cost of living pressures, and rising flight capacity were all reasons for declining prices.
The ACCC has been publishing reports on competition within the domestic airline industry every three months for the last three years. This followed directions from the Federal Government, led by then-Prime Minister Scott Morrison. This month’s report was the last one ordered by the Government.
They will continue to keep an eye on airlines’ conduct, and haven’t ruled out using enforcement powers to ensure compliance in the industry.