Canberra, December 9, 2025 — Australia’s domestic aviation market remains highly concentrated, with two airline groups controlling about 98% of all seats — a structure the Australian authority says continues to keep fares elevated despite record travel demand.
In its latest Domestic Airline Competition report, the ACCC said the Qantas Group and Virgin Australia have sustained strong profitability for a third consecutive year, benefiting from limited rivalry across major routes and high barriers to entry that have deterred new challengers.
“The domestic market has become increasingly segmented between two major players, and the lack of new entrants has contributed to sustained pressure on fares,” ACCC Commissioner Anna Brakey said.
High Demand Intensifies Pricing Pressures
More than 5.5 million passengers flew domestically in October 2025 — the second-highest monthly figure since 2019 — driven by peak spring travel and interstate teams appearing in both the AFL and NRL finals.
Even after the Qantas Group and Virgin Australia added more than 45 extra flights, planes remained fuller than usual, with 84.4% of seats occupied. Average October fares rose 3.2% year-on-year, reaching their highest level since December 2022.
“High demand placed additional pressure on capacity, and with limited competitive tension, fares increased,” Brakey said.
Regional Routes Remain at Risk
The ACCC said Air T’s proposed acquisition of Rex offers short-term reassurance for regional communities after Rex entered voluntary administration in 2024. Air T plans to maintain existing services and rebuild Rex’s pre-pandemic network.
“This will preserve connectivity where Rex is the sole operator and maintain competitive tension on overlapping regional routes,” Brakey said.
Operational Performance Slips
Adverse weather, including crosswinds in Sydney, contributed to deteriorating on-time performance in October. Only 74.1% of flights arrived on schedule, well below the long-term average of 80.6%. The cancellation rate held at 2.1%.
“We expect airlines to improve reliability across all routes,” Brakey said.
Market Structure Under Scrutiny
The ACCC said the Qantas Group’s dual-brand strategy — Qantas for full-service travel and Jetstar for low-cost leisure — has helped it consolidate roughly two-thirds of the domestic market. Virgin Australia continues to target mid-market customers while maintaining its one-third share.
With Rex no longer competing on major city routes and no viable new entrant on the horizon, the ACCC cautioned that meaningful fare relief will be difficult.
“More rivalry is essential to deliver lower fares and greater choice for Australian travellers,” Brakey said.
