Domestic air travel in Australia has bounced back to pre-pandemic levels, with passenger numbers in June 2025 matching those of June 2019, according to the latest data from the Australian Competition and Consumer Commission (ACCC).
However, the ACCC’s Domestic Airline Competition report highlights that the growth in available seats has not kept up with rising demand, leading to higher airfares and ongoing challenges for travellers.
June 2025 Australian Domestic Performance
In June 2025, the total number of seats offered by major airlines was 2.8% lower than in June 2019.
While Qantas Group and Virgin Australia have increased their capacity since 2019, the exit of low-cost carrier Tigerair in 2020 has left a significant gap in the market.
Regional carrier Rex has also scaled back its services, further limiting options for travellers. “Tigerair’s withdrawal in 2020 reduced the availability of affordable travel options,” said ACCC Commissioner Anna Brakey.
“The lack of growth in seat capacity to match rising demand has likely driven up airfares in what could have been a more competitive market.”
Despite a 12.3% drop in jet fuel prices over the year to June 2025, average airfares across all fare types were slightly higher than the previous year.
This suggests that limited seat availability is putting upward pressure on prices, making it harder for consumers to find affordable flights.
However, relief may be on the way. Both Qantas Group and Virgin Australia are set to receive new aircraft in the second half of 2025, following delays caused by global supply chain issues.
Qantas will also redeploy 13 aircraft to Australian and New Zealand routes after closing its Jetstar Asia operations. These new and redeployed aircraft will primarily replace older or leased planes, with significant capacity expansions still under consideration.
Service Reliability Sees Improvement
On a positive note, domestic airlines have made strides in improving service reliability. In April 2025, the on-time performance rate for domestic flights hit a three-year high of 82.4%. This surpassed the long-term industry average of 80.7%.
Jetstar, Qantas, and Virgin Australia all outperformed this benchmark, with Virgin Australia leading the pack. In April and May, Virgin Australia achieved on-time arrival rates of 84.4% and 84.8%, respectively—the best performance for any domestic airline since February 2022.
“This improvement in on-time performance is great news for travellers, who can now have more confidence in arriving on schedule,” Brakey said.
“It reflects a collective effort by airlines, air traffic controllers, and airports.”
Cancellation Rates Improve
Cancellation rates have also improved, falling below the long-term industry average of 2.2% in April and May, though they edged up to 2.4% in June.
Virgin Australia and Jetstar led the way, with cancellation rates as low as 0.7% in April. However, Qantas lagged behind, with cancellation rates more than double those of its competitors over the quarter to June.
“We’ll keep a close eye on cancellation rates and expect airlines to address high rates to reduce disruptions for passengers,” Brakey noted.
Frequent Flyer Programs: Weighing the Benefits
The ACCC report also examined the role of frequent flyer programs, which are a major revenue driver for Qantas and Virgin Australia. As of December 2024, Qantas Frequent Flyer boasted 17 million members, while Virgin Australia’s Velocity program had 12.9 million.
These programs incentivize loyalty by offering rewards like free flights, seat upgrades, lounge access, and other perks.
However, Brakey urged consumers to carefully evaluate their value. “Frequent flyer programs can offer attractive benefits, but they also have drawbacks,” she said.
“Points may lose value, expire, or be hard to redeem, and airlines can adjust the status credits needed for higher tiers.”
Consumers are encouraged to research how these programs work and compare the benefits of earning points or status credits against the cost of flights.
By making informed choices, travellers can ensure they’re getting the best value when booking.
Looking Ahead
As Australia’s domestic air travel market recovers, challenges like limited seat capacity and higher airfares persist.
With new aircraft on the horizon and ongoing improvements in reliability, the industry is taking steps to meet growing demand.
However, travellers should stay mindful of fare costs and the true value of loyalty programs to make the most of their travel experience.