Australian Competition and Consumer Commission issues domestic airline competition report for 2Q2024

Australian Competition and Consumer Commission (ACCC) issued (22-Aug-2024) its domestic airline competition report for 2Q2024, with the following key findings:

• Improved conditions for consumers with declines in airfares, reduced cancellations and improved on time performance for services over 1H2024, although consumers "may miss out on the benefits of a more competitive domestic airline market" if Rex Airlines is "unable to re-commence its services between metropolitan cities";
  • In May-2024, 2.1% of flights were cancelled across the industry, compared to the long-term industry average of 2.2%. This is down from a peak of 5% in Dec-2023 and marks the first time the cancellation rate for Australia's domestic airlines dipped below the average since Oct-2020. The cancellation rate increased to 2.5% in Jun-2024;
• The "collapse of Bonza and withdrawal of Rex" from metropolitan cities means that - as of Jul-2024 - no domestic route has more than two competing airline groups;
• Between Nov-2023 and Apr-2024, for the first time in Australia, there was a route with four competing airline groups (Melbourne-Gold Coast). In Jun-2024, routes serviced by three airline groups represented 50% of domestic passengers;
• Compared to 2019 levels, airfares on routes with increased competition have been lower than the broader domestic network in every month since Feb-2023, indicating that "increased competition has resulted in lower airfares for consumers";
• The issues faced by Rex and the collapse of Bonza highlight the "significant challenges faced by new and expanding airlines in this sector", where fleet size in particular "can impact the ability for an airline to compete effectively".

ACCC commissioner Anna Brakey stated: "We are closely monitoring airfares and remain vigilant to any increases in prices on routes that Rex is no longer flying on". [more - original PR]