ACCC Reports Domestic Air Travel Returns to Pre-Pandemic Levels

The competition watchdog noted that the increase in airline seat capacity has led to lower airfares for domestic travel. The Australian Competition and Consumer Commission (ACCC) has confirmed that the domestic aviation sector has successfully rebounded from the impact of COVID-19, with passenger levels and capacity returning to pre-pandemic levels.

According to the latest report on Domestic Airline Competition in Australia, 4.9 million domestic passengers flew with major airlines like Qantas, Virgin, Jetstar, Rex, and Bonza in March. This represents 98.8 percent of the passenger levels seen in March 2019, with seat capacity slightly below pre-pandemic levels at 6.2 million.

In addition, February saw domestic passenger numbers exceeding pre-COVID levels for the first time since the pandemic began. This was attributed to various major events happening nationwide, such as concerts by Taylor Swift in Melbourne and Sydney, and a WWE event in Perth.

ACCC Commissioner Anna Brakey mentioned, “After a period of instability, the domestic airline industry has returned to pre-pandemic levels, leading to lower airfares for consumers. We anticipate this positive trend to continue as the industry stabilizes further.”

The ACCC reported a drop in domestic airfares and enhanced network reliability in March.

The ACCC stated that the average revenue per domestic passenger in March dropped year over year both in nominal and real terms by 1.4 percent and 4.8 percent, respectively.

“The report highlighted airfare spikes on certain routes in February, possibly due to increased demand from major events,” the ACCC explained.

In March 2024, the industry witnessed a decrease in flight cancellations, with only 2.8 percent of flights being cancelled, showing an improvement from the 5 percent rate in December 2023.

Furthermore, the industry’s on-time performance in March 2024 increased to 77.2 percent, up from 63.6 percent in December 2023.

The ACCC recently released its second report on the domestic aviation industry following a directive from the Albanese government to extend monitoring for another three years.

This decision came after the monitoring regime put in place by the Morrison government during the pandemic concluded in June.

The recommendation for the return of ACCC aviation monitoring originated from the Senate Select Committee on Commonwealth Bilateral Air Service Agreements, chaired by Nationals Senator Bridget McKenzie, in the previous year.

Bonza’s Voluntary Administration Reduces Competition

Meanwhile, the ACCC noted that domestic flight travelers to regional destinations will have fewer choices if Bonza does not resume operations after going into voluntary administration.

“Since Bonza started operating, travelers have benefited from more affordable airfares and direct connections to various regional and holiday destinations not serviced by other airlines,” Ms. Brakey mentioned.

The suspension of Bonza’s operations will reduce direct connections at Maroochydore airport in Sunshine Coast from 14 to three and decrease direct connections at Coolangatta airport in Gold Coast by half.

However, the ACCC clarified that due to its small fleet size and exclusion of major routes, Bonza does not hold more than a 2 percent market share.

“While Bonza’s competitive impact has been limited so far, its presence presented an opportunity for increased competition in the highly concentrated domestic aviation sector,” Ms. Brakey added.

Appointed administrator Hall Chadwick has yet to make a decision on the future of Bonza – whether it will continue trading out of administration, be acquired by a new entity, or be wound up.