SYDNEY, 23 August 2024: The Australian Travel Industry Association (ATIA) is calling for reforms in the wake of the ACCC report released on Thursday, which underscores the critical need for public policy settings that support competition within the aviation sector in Australia.
The Australian Competition and Consumer Commission’s (ACCC) latest report on Domestic Airline Competition in Australia reveals a significant impact of competition on airfare prices.
Specifically, when Rex commenced operations on several intercity routes in 2021, the average fare per passenger decreased by approximately 25%. This apparent correlation between competition and lower airfares highlights the importance of maintaining competitive dynamics within the domestic aviation market.
However, the recent collapse of Bonza and Rex’s subsequent withdrawal from intercity routes is challenging. With no route having more than two competing airline groups, the ACCC’s report confirms that this reduction in competition could lead to reduced choice and higher airfares, as lower prices are typically seen where multiple airlines compete on the same route.
The report also shows that since February 2023, routes with increased competition have consistently demonstrated lower average revenue per passenger compared to the broader domestic network. This trend, driven by Rex’s expansion into major city routes, reinforces the importance of competition in keeping airfares affordable for Australian travellers on both major city and regional routes.
The ACCC also noted that a reformed slot scheme at Sydney Airport could have helped strengthen competition, although this would only address part of the broader issue.
ATIA CEO Dean Long commented: “The ACCC’s ongoing monitoring of the domestic aviation industry provides timely and independent insights into aviation competition in Australia. This is a key reason ATIA advocated for these reports’ return.”
“The ACCC’s most recent report reinforces that Australia needs ongoing improvements to the way competition works in aviation, and ATIA continues to call for reforms to deliver better outcomes for travelling Australians and the many travel businesses that support them.”
