iscover
Virgin Australia has told the Productivity Commission that some regional markets “cannot sustain multiple airlines”.
In its submission to the inquiry on regional airfares, Virgin – which previously served regional routes with a fleet of ATR 72 turboprops – said the commission “should assess competition viability at a granular, route-specific level rather than relying solely on the number of operators present”.
This content is available exclusively to Australian Aviation members.
A monthly membership is only $5.99 or save with our annual plans.
- Australian Aviation quarterly print & digital magazines
- Access to In Focus reports every month on our website
- Unlimited access to all Australian Aviation digital content
- Access to the Australian Aviation app
- Australian Aviation quarterly print & digital magazines
- Access to In Focus reports every month on our website
- Access to our Behind the Lens photo galleries and other exclusive content
- Daily news updates via our email bulletin
- Unlimited access to all Australian Aviation digital content
- Access to the Australian Aviation app
- Australian Aviation quarterly print & digital magazines
- Access to In Focus reports every month on our website
- Access to our Behind the Lens photo galleries and other exclusive content
- Daily news updates via our email bulletin
“Many regional routes lack sufficient scale to sustain two or more airlines over the long term. The presence of multiple operators at a point in time does not necessarily indicate long-term sustainability, as dividing limited passenger volumes reduces load factors and increases unit costs,” the airline said.
“Short-term competition may therefore be followed by market exit, resulting in instability rather than durable consumer benefit.
“Assessments of competition viability should take account of the aircraft investment cycle and the long-lived, capital-intensive nature of aviation investment. Aircraft deployment involves substantial upfront commitment and cannot be reversed without material cost and disruption.
“Entry and exit decisions are therefore driven by expectations of sustainable returns over an investment cycle, not short-term fluctuations in demand or pricing.”
As an example, Virgin pointed to its former ATR services in Queensland, including Brisbane to Port Macquarie, launched in 2011, and Brisbane to Bundaberg and Moranbah, launched in 2013.
“Virgin Australia entered as the second carrier on Bundaberg and Moranbah. On Port Macquarie, there were no other operators. These three services ceased in 2017 as VA mainline operations, as the airline could not generate the required returns to make the routes sustainable,” it said.
“Since then, other airlines have entered Bundaberg and Moranbah as a second carrier on those routes, however it remains to be seen whether those current services can maintain a long-term presence in competition with Qantas.
“Port Macquarie has remained a market with a single operator and no competition. As at 2025, none of these routes have grown capacity compared to 2013 levels.”
Virgin also noted that connectivity through Sydney and Melbourne is “a relevant operational consideration for many regional services”.
“The commercial viability of some regional routes is strengthened where schedules can support reliable onward connections to domestic and international services, noting that this is influenced by airport operating capacity, terminal/gate availability and other day-to-day operational factors,” the airline said.
Virgin has largely ceded regional operations in the east to QantasLink and Rex, with Link Airways operating some VA codeshare services using Saab 340Bs. Its regional arm, Virgin Australia Regional Airlines, operates mainly in WA.
Want to see more stories from trusted news sources?
Make Australian Aviation a preferred news source on Google.
Click here to add Australian Aviation as a preferred news source.
[email protected]
says:One of the major problems as I see it with regional operations is the same as in our general life. Wherever and whatever, these days most often the peoples’ expectations are quite different from that which is/are reasonably available. eg in recent times there was a change of gauge in a service ex ISA for operational/economic reasons, and a very vocal complaint was about the lack of “WiFi” on the new A/C type. In addition, the travelling public get anti if their flight is not a direct operation so maybe in these times they, like us all have to change and enjoy maybe more sectors for our money otherwise economics might cause a cancellation and then a coach trip instead and, just quietly, they aint cheap either.