What's Happening?
The Australian Competition and Consumer Commission (ACCC) has released a report indicating that domestic air travel in Australia has returned to pre-pandemic levels, although seat capacity has not kept pace with demand. The report highlights the impact of Tigerair's exit from the market in 2020, which has contributed to higher prices due to reduced low-cost travel options. Despite a 12.3% decrease in jet fuel prices over the past year, airfares have increased slightly. The Qantas Group and Virgin Australia are expected to receive new aircraft later in 2025, which may help address capacity issues. Service reliability has improved, with on-time performance rates reaching a three-year high in April 2025.
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Why It's Important?
The ACCC's findings underscore the ongoing challenges in the domestic airline industry, particularly in terms of capacity and pricing. The lack of growth in seat availability has led to higher costs for consumers, affecting affordability and accessibility of air travel. The anticipated arrival of new aircraft could alleviate some capacity constraints, potentially leading to more competitive pricing. Improved service reliability is a positive development for travelers, enhancing confidence in flight schedules. The report also emphasizes the significance of frequent flyer programs, which play a crucial role in consumer choice and airline revenue.
What's Next?
Airlines are expected to continue efforts to improve capacity and service reliability. The introduction of new aircraft may lead to increased seat availability, potentially reducing prices. The ACCC will monitor cancellation rates and expects airlines to address high rates to minimize disruptions. Consumers are encouraged to evaluate frequent flyer programs carefully, considering potential benefits and drawbacks. The industry will likely focus on balancing capacity growth with maintaining service quality.
