Very high demand for domestic air travel in September and October 2025 put additional pressure on seating capacity, and led to higher airfares for travellers in October, the ACCC's latest Domestic Airline Competition report has found.
Domestic airlines carried over 5.5 million domestic passengers in October 2025. This was 3.8 per cent higher than October 2024 and was the second highest passenger numbers recorded for any month since January 2019, the earliest month for which the ACCC has monitoring data on the domestic airline industry.
"While September and October are typically very busy months for domestic air travel, both the AFL and NRL featured interstate teams in their finals this year which led to additional demand for travel to Melbourne and Sydney," ACCC Commissioner Anna Brakey said.
Combined, the Qantas Group and Virgin Australia reportedly added over 45 additional flights to their networks to service the high demand in late September and early October. These additional flights contributed to overall seating capacity for domestic routes increasing in October 2025 by 4.5 per cent compared to October 2024.
Despite this increase to seating capacity, the high demand for domestic travel meant that flights were still fuller than normal. In October 2025, 84.4 per cent of available seats on flights were filled by passengers, compared to the 12-month average of 81.6 per cent. This contributed to average airfares in October 2025 being higher than any month since December 2022 and 3.2 per cent higher than they were in October 2024.
"Airfares are typically elevated during peak demand periods, but the higher passenger levels in October 2025 placed additional pressure on seat capacity which pushed up airfares for consumers," Ms Brakey said.
Air T's acquisition of Rex set to preserve regional connectivity
The announcement of Air T's intention to purchase Rex provides reassurance to communities that regional connectivity provided by the airline will continue.
"Rex provides important connectivity and competition across many regional communities, and Air T's purchase of Rex is an important milestone in preserving this," Ms Brakey said.
Rex entered voluntary administration in July 2024. Air T has announced plans for Rex to continue operating services on existing regional routes and rebuilding the full network of regional routes that it was operating before the pandemic.
"This will not only offer consumers continuity for the routes where Rex is the sole operator, but it will preserve competitive tension on routes where Rex competes with other airlines, leading to better outcomes for consumers," Ms Brakey said.
On-time performance declines in October due to adverse weather
The on-time performance for domestic flights declined in October 2025 due in part to adverse weather events such as cross winds in Sydney. Only 74.1 per cent of flights arrived on time, compared to the long-term industry average of 80.6 per cent.
The industry cancellation rate was 2.1 per cent, which was consistent with the long-term average of 2.2 per cent.
"We expect the airlines to improve their service reliability across all routes to give consumers a better experience when they travel," Ms Brakey said.
Qantas Group and Virgin Australia's financial results demonstrate strong passenger demand and lack of domestic competition
This quarter's report analysed the 2024-25 financial results for the Qantas Group and Virgin Australia. Both carriers have sustained three consecutive years of profitable earnings, marking a period of consolidation and strength for the two major airline groups.
The Qantas Group's earnings were largely driven by growth in Qantas' Loyalty program and the Jetstar arm of its business. Jetstar Domestic recorded 55 per cent growth in earnings since 2023-24, benefiting from strong demand for domestic leisure travel and its position as the only low-cost carrier in Australia.
Virgin Australia has similarly benefited from strong passenger demand and growth in its Velocity Frequent Flyer program.
"The high barriers to entry into the domestic aviation sector have helped to stave off competition from new entrants, particularly since Rex withdrew from routes between major cities," Ms Brakey said.
Combined, the Qantas Group and Virgin Australia service about 98 per cent of the domestic airline market, which has become increasingly segmented in recent years with the major airline groups targeting different types of travellers.
In 2020, Virgin Australia shifted its focus to mid-market customers and committed to maintaining a one-third passenger market share. Meanwhile, the Qantas Group's dual brand strategy has enabled it to target customers opting for a full-service experience via Qantas and budget conscious travellers via Jetstar. This distinction between two different customer bases has allowed the Qantas Group to consolidate approximately a two-thirds share of the domestic airline market.
"More competition in the domestic airline industry is essential to ensure consumers can enjoy lower airfares and more choice," Ms Brakey said.
Background
On 6 November 2023, the Treasurer directed the ACCC to recommence domestic air passenger transport monitoring. Under this direction the ACCC is to monitor prices, costs and profits relating to the supply of domestic air passenger transport services for a period of three years and to report on its monitoring at least once every quarter.
The ACCC collects data from Jetstar, Qantas, Rex and Virgin Australia for monitoring purposes.
Rex entered voluntary administration in July 2024 but continues to operate its regional services. The government is guaranteeing regional flight bookings for Rex customers throughout the voluntary administration process.
