Virgin Australia and Jetstar reported strong passenger demand growth throughout most of 2024, which continued into the Christmas period, the ACCC's latest Domestic Airline Competition report has found.
Compared to December 2023, the number of domestic passengers flown by Virgin Australia in December 2024 increased by 15.8 per cent, while Jetstar's passengers grew by 11.2 per cent. The number of passengers flown by Qantas increased by 3.2 per cent over the same period.
"Despite some airlines increasing their seating capacity throughout the year, this was outstripped by the growth in passenger numbers, leading to fuller flights," ACCC Commissioner Anna Brakey said.
The report found that flights were fuller than they have been for some time. In November 2024, flights on services between metropolitan cities were 90.4 per cent full. This was the highest rate recorded since at least January 2019, the earliest month for which the ACCC has data.
"While we recognise that delivery delays for new aircraft have presented significant challenges, we encourage all airlines to find other ways to increase their seating capacity to cater to the growing passenger demand."
Cancellation rates improve but flight delays continue
The industry cancellation rate improved in December 2024, when 1.8 per cent of flights were cancelled. This was the third time in four months that the cancellation rate was better than the long-term average (2.2 per cent).
The improved cancellation rate is primarily associated with Virgin Australia, which cancelled just 0.6 per cent of flights in December 2024. Qantas had the highest cancellation rate in December 2024, at 2.7 per cent.
"Flight cancellations have been a real concern for passengers since the pandemic, so it is pleasing to see the improved performance in recent months by some airlines," Ms Brakey said.
"Virgin Australia, in particular, has reduced the frequency of cancellations across its network."
Airline cancellation rates - December 2022 to December 2024
Source: BITRE, On-time performance time series - December 2024. Qantas figures include QantasLink and Virgin Australia figures include VARA.
Note: A flight is regarded as a cancellation if it is cancelled or rescheduled less than 7 days prior to its scheduled departure time.
While travellers experienced fewer cancellations, they continued to face flight delays, with the on-time arrival rate across all airlines being 74.7 per cent in December 2024.
Rex had the most reliable on-time performance in December 2024, when 75.9 per cent of its flights arrived on time. Jetstar reported the worst on-time performance with 73.3 per cent of flights arriving on time.
Airfares stabilise following a peak over October and November
Average airfares across all fare types stabilised in December 2024 and were 3.0 per cent lower than what they were in December 2023. The fall in average revenue per passenger in December was more pronounced on major city routes (-4.4 per cent) than regional (-0.4 per cent) and remote (-2.3 per cent) routes.
"Travellers had some relief from high airfares in December, after school holidays and other factors pushed up the average price of domestic travel in October and November," Ms Brakey said.
"The reduction in airfares is likely to have primarily benefitted business travellers, as high demand for leisure travel over the Christmas period often leads to a spike in the price of 'best discount' tickets."
Index of real average fare revenue per passenger - December 2019 to December 2024
Source: ACCC calculations using data from the ABS and data collected by the ACCC from Bonza (up to March 2024), Jetstar, Qantas, Rex and Virgin Australia.
Note: (1) Average revenue per passenger includes both economy and business fare revenue. It excludes data associated with ancillaries, such as baggage fees, fees for seat selection and food and drink sold on board. (2) Data has been adjusted for inflation using ABS CPI quarterly data up to December 2024. (3) Grey bars indicate December and Easter holiday periods.
Changes to domestic airline competition over the past 30 years
This quarter's report includes an analysis of the state of competition in Australia's domestic airline sector over the past 30 years.
The industry's competitive landscape has fluctuated throughout this time, and the report highlights how consumers have benefited during periods when there was stronger competition.
Timeline of domestic aviation since 1990
The report observed fierce competition in the early 2010s, when Virgin Blue rebranded to Virgin Australia to better compete with Qantas for business travellers. During this time, both airlines competed vigorously for market share by raising capacity and reducing airfares.
At the same time, Tiger and Jetstar competed for the budget leisure customer segment of the domestic market.
This competitive rivalry between the airlines declined in the mid-2010s, when Virgin Australia and Qantas abandoned their price war after incurring significant financial losses.
At around the same time, service reliability began to worsen, as the average industry cancellation rate grew significantly over the next decade. In 2014, the average cancellation rate was above 2.0 per cent for just one month of the year, compared to nine months out of 12 in 2024.
"Improved competition in the domestic airline industry is essential to ensure consumers can enjoy lower airfares, better service quality and more choice," Ms Brakey said.
Background
On 6 November 2023, the Treasurer directed the ACCC to recommence domestic air passenger transport monitoring. Under this direction the ACCC is to monitor prices, costs and profits relating to the supply of domestic air passenger transport services for a period of three years and to report on its monitoring at least once every quarter.
The ACCC collects data from Jetstar, Qantas, Rex and Virgin Australia for monitoring purposes.
Rex entered voluntary administration in July 2024 but continues to operate its regional routes. The government is guaranteeing regional flight bookings for Rex customers throughout the voluntary administration process.
