The fare

In 2023, a Sydney resident trying to book flights to Bali for the school holidays was quoted more than A$6,000 for a family of four. ¹¹ Before the pandemic, the same trip would have cost around A$400 per person. ¹¹ She cancelled the holiday. ¹¹

Her experience was not unusual. Across Australia's domestic and international routes, airfares surged in the years after COVID-19 and have not returned to anything approaching pre-pandemic norms. [1,7] In December 2025, average domestic airfares were 4.3 per cent higher than they had been twelve months earlier. [1,7] Airfares in October 2025 were the highest since December 2022. ⁸

The airlines, meanwhile, are doing exceptionally well. The Qantas Group reported record underlying earnings of A$1.59 billion for the first half of the current financial year. [1,7] Virgin Australia, a private company that does not publish detailed financials, described record profits in the same period. ⁶ The two airline groups together account for almost 99 per cent of every domestic flight in Australia. ¹

This article is the first in The Rort's Airline Rort series. It establishes the basic facts: what Australians pay, what the airlines earn, and what the competition regulator's own data says about what concentration does to fares.

01What the ACCC's own data shows

The Australian Competition and Consumer Commission has been directed to monitor Australia's domestic airline market continuously since November 2023. ² It publishes a report every quarter. The reports are detailed, technically rigorous, and largely unread by the general public.

They contain data that should be national news. The most important single figure is this: the price per kilometre on an Australian domestic route depends almost entirely on how many airlines are competing for that route. ⁴

That table was presented to parliament by the Assistant Minister for Competition, Dr Andrew Leigh, in January 2024. ⁴ It is derived from the government's own competition taskforce analysis. ⁴ Its implication is unambiguous: the price Australians pay to fly is determined not by the cost of fuel, or the cost of labour, or the cost of aircraft maintenance, all of which are real factors, but by the number of airlines competing for their ticket. ⁴

Australia's domestic market has two carriers on almost every route it has. ¹ It had three briefly, when Rex attempted to enter capital city routes with Boeing 737s in 2022. Rex exited those routes in July 2024. ³ It had a prospective fourth in Bonza, a low-cost carrier that launched in 2023 and collapsed in April 2024. ³ After both exits, the ACCC documented higher fares and increased concentration. ⁹

02The profit picture: domestic versus international

There is one number in Qantas's most recent financial results that tells the story of Australia's aviation market more clearly than any other. It is the operating margin comparison between Qantas's domestic business and its international business. ²

In the first half of the 2024-25 financial year, Qantas Domestic recorded an operating margin of 16.1 per cent. ² In the same period, Qantas's international operations recorded an operating margin of 7.1 per cent. ² The ACCC noted this comparison explicitly in its May 2025 report. ²

The difference is competition. On international routes, Qantas competes with Emirates, Qatar Airways, Singapore Airlines, Cathay Pacific, Air New Zealand, Korean Air, and dozens of other carriers. ² Those carriers force prices down and margins compress accordingly. ² On domestic routes, Qantas competes primarily with Virgin and Jetstar, its own budget subsidiary. ² The margin is more than double.

The overall group results confirm the pattern. Qantas Group reported underlying profit before tax of A$2.39 billion for the full year to June 2025, up 15 per cent on the prior year. ⁵ Statutory profit after tax was A$1.61 billion, up 28 per cent. ⁵ Total industry revenue in FY24-25 was approximately A$17 billion. ¹⁴

These are not crisis-recovery earnings. They are structural profits generated by a market that, as the ACCC's own data confirms, has limited competition and consistently high load factors. [2,6]

03Full planes and still not enough capacity

The airline industry uses load factors, the percentage of available seats that are filled, as a measure of supply meeting demand. ² High load factors indicate strong demand; very high load factors indicate insufficient capacity relative to demand. ²

Australia's domestic market is running at historically high load factors. Jetstar recorded a load factor of 91.2 per cent in January 2025, the highest recorded for any Australian airline since January 2019. ² Virgin Australia hit 93.4 per cent in December 2024. ³ The industry average in March 2025 was 80.1 per cent, 1.8 percentage points above March 2019. ²

Translation: the planes are so full that when something goes wrong, a delay, a cancellation, a missed connection, there are no spare seats to rebook passengers onto. ³ High profits and poor service are connected. The market structure that produces one also produces the other. ³

Meanwhile, total domestic seat capacity in Q1 2025 was 2.7 per cent below 2019 levels. ¹⁰ Six years after the last normal operating year, Australia's airlines are still flying fewer seats than they were. Not because there is insufficient demand (load factors confirm there is more than enough demand) but because neither airline group has the economic incentive to add capacity when the existing capacity is already full and profitable. [2,3]

04The challenger story: every competitor eventually fails

Australia has a long history of new airlines attempting to challenge Qantas's dominance. The history is also a long history of failure. [3,12]

The Two Airline Policy was enacted in the Civil Aviation Agreement Act 1952 and prevailed in various forms until 1990, providing for two major operators on the domestic trunk routes: the government-owned Trans Australia Airlines and a privately owned carrier, Australian National Airways until 1957 and Ansett after it. ¹⁶ The ACCC likewise says that before 1990 only two airlines could operate key domestic routes, for most of the period Trans Australia Airlines and Ansett. ³ Deregulation was supposed to open the market. And for a period, it did. Compass began flying on 1 December 1990, a month after deregulation took effect on 31 October 1990. ¹⁶ By 2001 Impulse and Virgin Blue were competing with Qantas and Ansett. ²⁰ Tiger Airways Australia began flying in November 2007 ²³ and Virgin owned 60 per cent of it by October 2014. ²² They met with varying degrees of success.

A challenger would enter, fares would fall as competition intensified, and then the challenger would either exit or be absorbed.

The pattern that emerged was consistent: a challenger would enter, fares would fall as competition intensified, and then the challenger would either exit or be absorbed. Compass Airlines ceased operations on 20 December 1991, and a second Compass, which began flying in August 1992, failed in March 1993. [16,17,18] The ACCC decided in May 2001 not to oppose Qantas acquiring Impulse, and Qantas completed the purchase in November 2001. [19,21] Ansett's administrator halted all of the group's flights on 14 September 2001. ¹⁶ Virgin Australia, which already held 60 per cent of Tigerair Australia, said in October 2014 that it would buy the remaining 40 per cent for A$1. ²²

The most recent chapter follows the same arc. Rex Airlines, a regional carrier, attempted to expand onto capital city routes using Boeing 737 aircraft from July 2022. [3,9] The project was undercapitalised and operationally ambitious. Rex entered voluntary administration in July 2024, exiting all capital city routes. [3,9] Bonza, a new low-cost carrier that launched in early 2023, collapsed in April 2024 after operating for only about a year. [3,12] It served 37 routes, 30 of which were unserved by any other airline. ¹² After its collapse, those 30 routes went dark.

And in the same breath: March 2025 airfares up 9.6 per cent, 'a pattern that may become familiar in a low-competition environment.' ⁹

Correction, 15 October 2026. The quotation in this section, "The second failed attempt at a third domestic carrier in a decade", was attributed to the ACCC. It is not in the ACCC's May 2025 report ². It is the Switzer writer's own sentence, which reads "Bonza's crash out of the Australian market in April 2024 marked the second failed attempt at a third domestic player in a decade" ⁹. It is now quoted exactly and attributed to Luke Hopewell of Switzer Daily, not to the ACCC.

Correction, 19 October 2026. This section cited Switzer Daily ⁹ for the history of Compass, Impulse, Ansett and Tiger Airways. That page does not carry it. The history is now sourced to the Parliamentary Library's Ansett chronology ¹⁶, The Canberra Times [17,18], the ACCC ¹⁹, ABC Radio's PM ²⁰, The Australian Financial Review ²¹ and Australian Aviation ²². Three statements are corrected. The second Compass collapse was in March 1993, not 1992. Compass did not enter "by the early 2000s": it began flying on 1 December 1990. Nor did Tiger Airways Australia, which began flying in November 2007 ²³. The same section cited the ACCC’s February 2025 report ³ for the Two Airline Policy running from 1952 to 1990. That report (p. 25) does describe the Two Airline policy before 1990, under which only two airlines could operate key domestic routes, for most of the period Trans Australia Airlines and privately owned Ansett, but it does not give 1952. The 1952 Act is now sourced to the Parliamentary Library chronology ¹⁶, and the privately owned operator is no longer given as Ansett throughout, since Australian National Airways held that place until 1957. Reference 22 also carries a sentence on the 2013 purchase of the initial 60 per cent stake that sits below the site's members-only notice and could not be read from a public source. The article no longer states the 2013 purchase; it says only what the public part of the page carries, that Virgin already held 60 per cent in October 2014 and would buy the rest for A$1. The Switzer page remains the source for the quotation and the fare figures only.

05The international comparison: what competitive markets look like

The argument that Australia's geography, its vast distances and relatively small population, justifies higher airfares is one the industry makes repeatedly, and it contains some truth. Flying Sydney to Melbourne is not the same as flying London to Paris. ⁴

But the ACCC's own data refutes the geography argument when it comes to competition. The comparison is not Australia versus Europe. It is Australian routes with one carrier versus Australian routes with two carriers versus Australian routes with three carriers. ⁴ Same geography. Same distances. Same fuel. Different number of airlines. Fares almost halved. ⁴

The European Union's Single Aviation Market, established in 1993, allows any EU-registered carrier to fly between any two EU cities. ⁴ The result was the emergence of Ryanair and easyJet as transformative competitive forces that drove European airfares to a fraction of what Australian domestic travel costs, even accounting for shorter distances. ⁴

Australia does not have an open aviation market. International carriers like Qatar Airways can fly into Australian airports, but their ability to pick up passengers and fly them to other Australian cities, what aviation calls 'fifth freedom rights', is tightly controlled through bilateral air service agreements. ⁴ As this series will document in Article 3, when Qatar Airways applied to add 21 flights per week in 2023, the government blocked the application at the explicit request of Qantas.

The ACCC's own data shows that adding a third carrier to an Australian domestic route cuts the price per kilometre almost in half. In 2023, the government blocked a major international carrier's bid to increase competition, at the explicit request of the airline whose high domestic margins it would have threatened.

06What the airlines say

Qantas regularly publishes data showing that its fares have moderated from post-COVID peaks. In its FY24 results, the airline noted that 'Group domestic fares were 8 per cent lower than last year.' ¹³ This is technically accurate: after the extraordinary post-COVID fare spike, prices did ease somewhat as capacity returned. ¹³

But the relevant comparison is not year-on-year from the peak. The relevant comparison is with the structural baseline, with what fares would be if the market had the competitive structure that the ACCC's data shows is needed to produce lower prices for consumers. ⁴ And by that measure, fares remain elevated. December 2025 prices are 4.3 per cent above December 2024 prices. ⁷ October 2025 prices were the highest since December 2022. ⁸

Virgin Australia's position is worth noting too. Under Bain Capital's private ownership, Virgin does not publish detailed financial results. ² The market has two dominant carriers, only one of which is required to disclose its financial performance to the public. The ACCC receives non-public data from both under its monitoring direction, but that data is not available to consumers, journalists, or researchers.

The Treasurer's direction to the ACCC to monitor the market runs until December 2026. ² Monitoring is not the same as intervention. The ACCC can document concentration, report on it, and express concern about it. What it cannot do is mandate a new entrant, reallocate slots, or compel either airline to add capacity. ²

07The rort

The basic facts of the Australian domestic aviation market are these, all sourced from the competition regulator's own quarterly reports: [1,2,4,7]

The price per kilometre on a route with three carriers is half the price on a route with one carrier, according to federal government data. ⁴

Domestic operating margins (16.1 per cent) are more than double international margins (7.1 per cent) for the same airline. ²

Load factors are at near-record highs, indicating demand well in excess of supply. [2,3]

Domestic seat capacity is still below 2019 levels despite record Qantas Group underlying earnings in the first half of 2025-26. [1,3,10]

Both carriers reported record or near-record earnings as of the most recent reporting period. [1,6]

Airfares remain above pre-COVID levels by multiple measures. [7,8]

This is not a post-COVID recovery story. It is the structural condition of a market in which two companies have divided most of the country between them, entry by challengers has failed twice in a decade, and the competitive pressure that would lower prices has been kept out, including, as this series will document, by a decision of the federal government made at the request of the dominant carrier. [9,11]

Article 2 of this series examines how the duopoly was built, and why every challenge to it has failed.

If it's a rort, we cover it.

Correction, 7 October 2026. This article said, in its subtitle, opening, fact box and key facts, that two airline groups control 94 to 99 per cent of domestic flights. The ACCC figure it cites ¹ is almost 99 per cent of domestic flights; the 94.4 per cent figure is a different measure, share of passenger carriage as at March 2025 ⁹. Those passages now say almost 99 per cent.

Correction, 15 October 2026. The 7 October correction above said the 94.4 per cent figure was a different measure, the share of passenger carriage in March 2025, and cited Switzer Daily ⁹. That page was read on 15 October 2026 in the Internet Archive's copy of 24 January 2026. It gives 94.4 per cent for the two groups and says the Qantas Group alone holds over 60 per cent, but the 94.4 per cent figure does not appear in the ACCC's May 2025 report ². The ACCC reports that the Qantas Group carried 63.9 per cent of passengers in March 2025 and Virgin Australia 34.4 per cent, so the two largest domestic airline groups carried 98.3 per cent (May 2025 report, p. 21) ², and the 94.4 per cent figure is withdrawn. The almost 99 per cent of flights figure in this article is a separate measure from the ACCC and is unchanged.

Update, 19 October 2026. The ACCC's newest quarterly report, Domestic Airline Competition in Australia, September 2026, was published on 15 September 2026. ²⁴ This desk could not open it, because accc.gov.au refused its automated request on 19 October 2026, so the points below come from two trade reports of the ACCC's release. ^{25 26} They report that the Qantas Group's underlying earnings before interest and tax for 2025-26 were down 11 per cent on 2024-25 (the Qantas Group's own FY26 Supplementary Presentation of 27 August 2026 gives A$2,348 million against A$2,639 million, a fall of 11.0 per cent) ²⁷, and Virgin Australia's up 13.4 per cent, to A$753 million; the ACCC's chair, Gina Cass-Gottlieb, is quoted as saying both groups "continued to generate substantial earnings in 2025-26". ^{25 26} The statement in this section that both carriers reported record or near-record earnings as of the most recent reporting period was true of the first half of 2025-26 ¹; for the full year, these reports do not support it for the Qantas Group. On fares, the reports say average domestic airfares were 3.5 per cent higher in May 2026 and 4 per cent higher in June 2026 than a year earlier, before moderating in July, and that seat capacity fell 2.3 per cent in each of May and June. ^{25 26} The chair is quoted as saying that, with "resilient demand and high load factors", the announced capacity reductions "may place upward pressure on airfares". ²⁶ This update does not re-check the share of flights, the load factors against their record, or the domestic and international margins: the reports as read give no figure for them. The 16.1 per cent and 7.1 per cent margins above are for the first half of 2024-25 and are unchanged.