Australian travellers have been paying up to 95 per cent more for domestic airfares since Rex’s collapse, the ACCC has found.
After regional airline Rex went into voluntary administration and stopped flying to metropolitan areas in July 2024, the average ticket price for major city routes spiked and customers were left with less choice.
The ACCC said the price hikes directly correspond with Rex no longer offering Australian airline customers budget airfares between cities including Adelaide, Melbourne, the Gold Coast and Canberra.
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On average, ACCC said the revenue per passenger on these routes for airlines jumped by 13.3 per cent to September 2024.
“The recent spike in airfares corresponds with a less competitive domestic airline sector after Rex’s exit from 11 of the 23 services between metropolitan cities,” ACCC Commissioner Anna Brakey said.
“While we also typically see a seasonal peak in air travel in September due to major sporting events and school holidays, there were additional pricing pressures this year.
“Passengers were no longer able to access the lower fares that Rex offered, and airline seating capacity decreased following Rex’s exit. This in turn has contributed to higher airfares.”
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Since Rex axed 11 routes to major cities, the number of seats on services across all airlines fell by 6 per cent.
This led to fuller flights, increased competition and higher prices.
The ACCC’s report found the price increases have impacted many of the services Rex once operated.
This includes airfares between Adelaide and Melbourne which are up 95 per cent to an average of $296.
Tickets for Melbourne to the Gold Coast have jumped 70 per cent to $432 and Canberra to Melbourne is up 54 per cent to $298 between July and September 2024.
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Comparatively, research from Flight Centre’s FCM Travel and Corporate Traveller found the average cost of an international economy flight has fallen between 5 and 10 per cent in the past year.
Since Rex axed routes and fellow regional airline Bonza’s collapse, there is no domestic route serviced by more than two major airline groups.
The ACCC said Qantas and Virgin now service 98 per cent of domestic passengers in Australia.
“The exit of Rex as a third competing airline group on services between metropolitan cities may have significant longer-term impacts on the domestic aviation sector,” Brakey added.
“The domestic airline industry has become even further concentrated, and it may be some time before a new airline emerges to compete on popular services between metropolitan cities, with normal barriers to entry and growth exacerbated by aircraft fleet supply chain issues and pilot and engineer shortages.”
The ACCC report follows news Rex will be handed an $80 million lifeline from the federal government to continue operating.
Infrastructure and Transport Minister Catherine King and Workplace Relations Minister Murray Watt confirmed the cash injection would “support the business to continue offering critical services for regional communities”.
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