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Australia’s two major airline groups were responsible for almost 99 per cent of domestic flights in the first half of the financial year, according to the ACCC.
The competition watchdog, in its latest Domestic Airline Competition report, noted “strong financial performance and growth” for both Qantas Group and Virgin Australia in the six months to January 2026, with domestic seat capacity continuing to increase.
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Qantas notched up record underlying earnings before interest and taxes (EBIT) of $1.59 billion for the half, up 5.4 per cent year on year, while Virgin reported underlying EBIT of $490 million, up 11.7 per cent.
“The strong financial results reported by The Qantas Group and Virgin Australia demonstrate the ongoing resilience of Australia’s domestic aviation market, driven by consistently strong passenger demand and favourable operating conditions,” said ACCC commissioner Anna Brakey.
“Nearly 99 per cent of all flights were serviced by either Qantas Group or Virgin Australia, with high barriers to entry in the aviation industry contributing to a concerning lack of competition and choice for consumers.”
The ACCC also noted a rise in available seats thanks to “new aircraft deliveries, redeployment of aircraft across domestic networks, and greater use of existing fleets”, though capacity was still 3.3 per cent below pre-COVID levels.
“Average airfare prices also fell during the quarter to January 2026, but were still 4.3 per cent higher in December 2025 compared to December 2024,” the commission said.
“Passenger demand followed seasonal patterns, remaining strong through November and December 2025, before easing in January 2026 as holidays wound down and corporate travel demand remained low.”
According to Brakey, growth in seat supply is still outstripping demand, though Easter holidays and ANZAC Day are expected to drive an increase in demand for April leisure travel.
“It’s pleasing to see airlines increase capacity, offering two per cent more seats in January 2026 than a year earlier. We’ve now seen capacity growth outpace passenger demand for six months in a row,” she said.
Data from the federal government’s competition taskforce in January 2024 showed that adding more competitors on a route can dramatically slash airfares.
Dr Andrew Leigh, the Assistant Minister for Competition, pointed to figures from the taskforce showing that airfares average 39.6 cents per kilometre on routes with only one carrier, 28.2 cents on routes with two carriers, and 19.2 cents with three.
“In other words, the price per kilometre is halved when three competitors fly a route compared with the situation when there is only a single monopoly airline. With four or five competitors, the price drops further still,” he said at the time.
Qantas Group and Virgin Australia have not faced a serious domestic competitor since the collapse of Rex’s 737 operations in mid-2024.
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