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Former Bonza CEO Tim Jordan has labelled a lack of airline competition as “by far the largest contributor” to high regional airfares.
In his submission to the Productivity Commission’s inquiry into regional airfares and a rare public statement since Bonza’s 2024 collapse, Jordan singled out the dominance of Qantas Group – and, to a lesser extent, Virgin Australia – as a major factor placing upward pressure on fares.
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“Australian aviation is the most centralised and consequently the least competitive of all major domestic aviation markets in the world,” he said.
“More than 98 per cent of the domestic market is controlled by two airline groups, with the dominant Qantas Group approximately twice the market share of the Virgin group.
“Regional Australia is in an even worse position than that, with the Virgin group not participating in many large regional markets.
“Qantas effectively tolerates Virgin on domestic trunk markets and QantasLink tolerates Rex on regional trunk markets. Australian aviation and the Australian travelling public is largely beholden to the Qantas group and their ongoing tolerance levels.”
While Jordan also cites factors including higher regional airport operating costs, “effective geographical monopolies” for regional airport operators, and lack of choice in ground handling suppliers, he notes that “the reality for most large regional centres is that they have Qantas Group service predominantly via QantasLink”.
“In the largest trunk regional markets there is also service offered by Rex or in limited cases service on Virgin (which is generally operated by Alliance),” he said.
“However, there are also a number of large markets in excess of 100,000 annual customers that just have QantasLink service today.”
According to Jordan, the “current entrenched position of the Qantas group along with a Qantas-tolerated Virgin group drives a very ordinary aviation outcome for Australian consumers”.
“Australia currently has a severely limited route network and fares that do little to encourage and maximise economic or tourism growth,” he said.
“All levels of government should be encouraging further and increased competition to change the status quo. It is without doubt the single largest hurdle against aviation progress in Australia.
“Unfortunately, the current market and highly effective power of incumbents mean that changing the status quo gets harder as each airline challenger operates its last flight.”
Data from the Federal Government’s competition taskforce in January 2024 had 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 declined to comment, but Australian Aviation understands it will be making its own submission to the inquiry.
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says:I fully understand Tim Jordan’s views and clearly, he is not without expertise in this arena but, the facts are that we are in a de-regulated commercial aviation market, anyone who can meet the requirements for an AOC can operate an air service; – the question is, can they afford to do it and, the answer is no! – Virgin earlier decided to opt out of their regional activities for operational/financial reasons, REX is still a works in progress so, if as it is claimed the pricing of regional airfares is as alarming as claimed please let us see itemised examples/costings of such: blanket unsupported statements don’t fix the problem/s