Coalition slams Labor ‘inaction’ on airlines as domestic airfares climb in wake of Rex exit from major city routes

The Coalition says travellers are seeing the effects of government inaction on airline competition, after domestic fares jumped 12 per cent following Rex’s exit from major city routes.

The Coalition says travellers are seeing the effects of government inaction on competition in the airline industry, after domestic fares jumped 12 per cent in seven weeks since Rex exited major city routes.

Bureau of Infrastructure, Trans­port and Regional Economics’ data for September revealed the cheapest fares in the market were up 12.5 per cent since July, and flexible economy fares were 12.3 per cent more expensive.

The hikes meant travellers were forking out $170 for fares that were previously $150, or $400 instead of $350.

BITRE collected fare data on 21 major interstate routes from the websites of Qantas, Jetstar and Virgin Australia for the monthly index.

Rex withdrew from domestic trunk routes on July 31 after going into administration with debts in excess of $500m.

Opposition transport spokeswoman Bridget McKenzie said it was clear travellers were now feeling the impact of not one but two airlines going into administration within four months, on the Albanese government’s watch.

“Airline travel is an essential service for many Australians – ­especially those living in the ­regions,” Senator McKenzie said. “Labor’s aviation white paper was silent on competition reform and there is no indication … (it) intends to take action to support travellers nor address the entrenched duopoly that exists in Australia.”

Transport Minister Catherine King was unavailable for ­comment.

Last week, Senator McKenzie proposed strengthening competition laws to allow governments the power to force divestitures in companies such as the Qantas Group.

She said she wasn’t proposing Qantas be forced to sell Jetstar but suggested the threat of divestiture would be sufficient to keep the dominant airline group in line.

Nationals leader David Littleproud said the proposal was not Coalition policy.

Rex continues to fly regional routes but has permanently grounded its major city services. Picture: iStock

The BITRE index showed “flex” economy fares on Qantas and Virgin Australia were now at their highest level in more than three years at 93.6 per cent of the long-term average, compared to 81.3 per cent in July.

Best discount fares on Qantas, Jetstar and Virgin Australia were at 70 per cent of the long-term ­average, compared to 57.5 per cent two months ago.

Business class fares remained relatively steady in recent months, but were still 12 per cent higher than the same time last year, at 63.5 per cent of long-term average.

A Qantas Group spokesman said their fares had been relatively flat since April and were in fact lower than this time last year when adjusted for inflation.

“The data in the BITRE report does not represent average fares which customers are paying to fly domestically,” he said.

“Qantas and Jetstar have regular sales fares with Jetstar offering $67 fares between Melbourne and Hobart while Qantas has fares for $139 between Sydney and Ballina.”

The Australian Competition & Consumer Commission recently warned Qantas and Virgin Australia it would be watching them closely, in the wake of Rex’s exit from major routes.

In its August airline monitoring report, the ACCC said when Rex entered several intercity routes in 2021, the average fare paid per passenger fell by some 25 per cent.

On Monday, an ACCC spokeswoman said it was continuing to monitor airfares but could not comment on any potential actions.

“Any increases in prices following Rex’s exit from a route are of concern,” she said. “We will be publishing our next quarterly domestic airline monitoring report in mid-November.”

Qantas recently attributed a $387m dip in its $2.08bn annual profit to “moderating airfares” as well as increased spending on customer initiatives.

Virgin Australia is yet to reveal its results for the 2024 financial year but CEO Jayne Hrdlicka told an aviation summit last week the airline was “performing well financially”.

At the same time as hiking airfares, Qantas has flagged domestic travellers will pay 20 per cent more for changing a flight, updating a name on a booking or cancelling a reservation from October 9.