Domestic air travel in Australia has recovered to pre-pandemic passenger levels, but seat capacity has lagged behind demand, the Australian Competition and Consumer Commission says in its latest Domestic Airline competition report.
The ACCC found that in June 2025 the number of seats flown by the major carriers remained 2.8 per cent below levels in June 2019. While the Qantas Group and Virgin Australia have lifted capacity since 2019, the regulator says the market has not yet recovered the low-cost capacity lost when Tigerair exited in 2020, and Rex has trimmed capacity on regional routes over the same period.
The shortfall in capacity has coincided with slightly higher average airfares over the year to June 2025 despite a 12.3 per cent fall in jet fuel prices, the report shows. The ACCC suggests the constrained supply has likely kept fares higher than they would have been in a more competitive market.
Both Qantas and Virgin are due to take delivery of new aircraft in the second half of 2025 after years of global supply delays, and Qantas will increase its domestic and New Zealand fleet following the closure of Jetstar Asia and the redeployment of 13 aircraft. Airlines told the regulator they expect to use incoming and redeployed jets primarily to replace older or leased aircraft before pursuing any major capacity expansions.
Service reliability has improved markedly. Domestic flights arrived on time 82.4 per cent of the time in April 2025, a three-year high and above the long-term industry average of 80.7 per cent. Jetstar, Qantas and Virgin all exceeded that long-run benchmark, and Virgin recorded its best on-time arrival rates since February 2022 in April and May.
Cancellation rates also eased in April and May, dropping below the long-term average of 2.2 per cent, before edging up to 2.4 per cent in June. The ACCC notes the improvement was driven largely by Jetstar and Virgin, both of which cancelled just 0.7 per cent of domestic flights in April. Qantas’s cancellation rate remained higher than its rivals over the quarter to June, averaging more than double the rates recorded by Jetstar and Virgin.
The ACCC continued to monitor cancellations by airline, reporting Qantas cancellation rates of 2.7 per cent in April, 2.9 per cent in May and 3.5 per cent in June; Jetstar at 0.7, 1.3 and 1.1 per cent respectively; Virgin at 0.7, 0.8 and 1.6 per cent; and Rex at 1.9, 3.0 and 2.3 per cent. The industry average was 2.0, 2.1 and 2.4 per cent for April, May and June.
The quarter’s report also examines frequent flyer programmes, which generate significant revenue for the major carriers. As of December 2024, Qantas Frequent Flyer had 17.0 million members and Virgin Australia’s Velocity programme had 12.9 million. The ACCC urged consumers to consider the overall value of membership before prioritising a carrier for points or status, noting risks such as devaluation, expiry and limited availability of reward seats and upgrades.
The monitoring program was reinstated by the Treasurer on 6 November 2023, directing the ACCC to track prices, costs and profits in domestic air passenger services for three years with quarterly reporting. The ACCC collects data from Jetstar, Qantas, Rex and Virgin Australia.
Rex entered voluntary administration in July 2024 but continues to operate regional services, with the federal government guaranteeing regional bookings for Rex customers during the administration process, the report notes.
