The Australian Competition and Consumer Commission (ACCC) has found that the “absence of competitive pressure” a key factor for strong financial results of the country’s two largest operators.
In its quarterly airline competition report, the commission also finds that a “resurgence” in travel demand has helped lift the earnings of Qantas Group and Virgin Australia.
For the six months ended 31 December 2024, Qantas Group - comprising mainline operator Qantas and low-cost unit Jetstar - saw its underlying pre-tax profit increase 11% to A$1.39 billion ($896 million), with revenue up 9% year on year.
The ACCC says the improvement in earnings “reflect its dominance of the domestic airline sector”.
The ACCC found that Jetstar benefited the most from the reduction of competition – through the collapse of low-cost operator Bonza in 2024 — effectively becoming the only low-cost operator in the domestic market.
“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,” states ACCC commissioner Anna Brakey.
The ACCC also found that the withdrawal of Regional Express from mainline jet operations in 2024 – owing to financial woes – benefitted Virgin Australia the most.
The second-largest operator does not publicly disclose its financial statements, but former airline chief Jayne Hrdlicka said in February that the carrier had achieved record profits.
Virgin saw its domestic market share increase following the collapse of Rex, which is now under administration, up more than 3 percentage points in March.
“Virgin Australia also secured three of Rex’s Boeing 737 aircraft leases, which has facilitated its ability to add seat capacity and improve network resilience,” the commission notes.
In its report, the ACCC also found that the average domestic airfare in the first quarter of 2025 to be lower. By January, airfares were down 16.1% lower than in October 2024, before increasing 9.6% by March this year.
“The trends observed in average airfares since January reflect seasonal factors and are broadly consistent with those observed in previous years,” the ACCC’s Brakey adds.
