Australia’s domestic aviation sector appears to be on the rebound from the COVID-19 pandemic, according to the latest report by the Australian Competition and Consumer Commission (ACCC).
The report, titled “Domestic Airline Competition in Australia,” reveals encouraging signs for the industry. It showcases a general recovery in domestic passenger numbers, seat capacity, and airfare prices.
Passenger Numbers Near Pre-Pandemic Levels
Key findings from the report include:
- Domestic passenger numbers carried by major airlines (Bonza, Jetstar, Qantas, Rex, and Virgin Australia) reached 4.9 million in March 2024, nearly matching (98.8%) pre-pandemic figures from March 2019.
- Airlines offered close to pre-pandemic seat capacity (around 6.2 million seats) in March 2024.
ACCC Commissioner Anna Brakey expressed optimism about the industry’s recovery. “The domestic airline industry is showing positive signs, with passenger numbers returning to near pre-pandemic levels and seasonal patterns resembling those seen before COVID-19.”
“This increase in seat capacity has contributed to lower airfares for domestic travelers. We hope this trend continues as the industry stabilizes.”
The report also highlights a slight decrease in average revenue per domestic passenger in March 2024 compared to March 2023 (both nominal and real terms).
This could be attributed to the increase in seat capacity leading to more competitive pricing.
February Spike Attributed to Major Events
The report acknowledges a temporary surge in airfare prices on some routes in February 2024. This is likely due to high demand driven by several major events across the country.
Notable amongst these were Taylor Swift’s concert tour and a World Wrestling Entertainment event. Notably, February 2024 marked the first time since the pandemic that domestic passenger numbers surpassed 2019 levels.
Regional Connectivity Concerns with Bonza’s Struggles
The report raises concerns about the potential impact of low-cost carrier Bonza’s voluntary administration on regional connectivity.
Bonza played a significant role in establishing new routes and connecting regional hubs within the domestic network.
The total number of domestic routes in Australia climbed to 178 in March 2024, reflecting a net increase of 22 routes compared to 2019.
Before entering administration, Bonza offered 37 domestic routes, with 35 connecting regional locations and 30 being unserved by other airlines.
Ms. Brakey commented, “Since Bonza’s launch, travelers have benefited from more affordable airfares and direct connections to regional and holiday destinations not previously offered by other airlines.”
The suspension of Bonza’s services is likely to cause significant disruptions to direct connections, particularly at Maroochydore (Sunshine Coast) and Coolangatta (Gold Coast) airports.
Limited Competition Impact
While Bonza’s presence in the market was relatively short-lived, it did represent the introduction of a new competitor in the highly concentrated domestic aviation sector.
The report acknowledges that Bonza’s overall impact on competition was limited due to its small fleet size and exclusion of major routes from its network.
Service Reliability Shows Improvement
The report highlights improvements in service reliability, although it remains below pre-pandemic levels.
Flight cancellations decreased from 5.0% in December 2023 to 2.8% in March 2024. Similarly, on-time performance improved from 63.6% to 77.2% during the same period.
Overall, the ACCC report paints a cautiously optimistic picture of Australia’s domestic aviation industry.
While passenger numbers, seat capacity, and airfare prices are nearing pre-pandemic levels, challenges remain, particularly regarding regional connectivity and service reliability. The potential impact of Bonza’s situation on the domestic aviation sector still requires close monitoring.
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