If you’ve felt that booking a domestic flight in Australia has become a wallet-pinching exercise lately, you’re not imagining it. The latest Australian Competition and Consumer Commission (ACCC) report confirms what many travellers have been grumbling about over airport coffees — the planes are full, the prices are high, and there aren’t enough seats.
According to the ACCC’s Domestic Airline Competition report, while passenger numbers have roared back to pre-pandemic levels, seating capacity has failed to keep pace. In June 2025, the total number of seats flown by the major domestic carriers was 2.8 per cent lower than in June 2019.
This shortage isn’t because Australians have suddenly developed a taste for cramped conditions, far from it. It’s because, despite Qantas and Virgin Australia increasing capacity since 2019, the market has never truly recovered from the demise of Tigerair in 2020, a budget carrier whose cheerful orange branding masked a serious competitive edge. Add a capacity reduction from Rex on regional routes, and the skies have become less roomy.
“The withdrawal of Tigerair in 2020 significantly reduced the capacity for low-cost travel from the domestic market,” said ACCC Commissioner Anna Brakey.
“Since then, the lack of growth in seat capacity to meet rising demand has likely meant consumers are paying more than they would have in a more competitive, better-supplied market.”
When Less Means More for Airlines, Not Travellers
Here’s the kicker: even though jet fuel prices fell by 12.3 per cent in the year to June 2025, the average airfare — across all fare types — was slightly higher than a year earlier. In other words, the drop in operating costs has done little to ease the burden on travellers’ wallets.
Part of the problem lies in the aircraft shortage saga — a mix of delayed deliveries, global supply chain snarls, and lingering pandemic after-effects. The good news? Both Qantas Group and Virgin Australia are set to receive new aircraft in the second half of 2025.
In Qantas’s case, the fleet boost will be turbocharged by the closure of Jetstar Asia, freeing up 13 aircraft for redeployment across Australian and New Zealand routes. But before anyone starts celebrating cheap flights to Cairns, airlines have made it clear these new birds will first replace older and leased aircraft rather than usher in a grand wave of extra seats.
Punctuality: Finally, Some Tailwinds
If there’s one bright spot for weary domestic flyers, it’s this: the industry has pulled up its socks on punctuality. April 2025 saw the highest on-time performance in three years, with 82.4 percent of flights landing within 15 minutes of schedule.
This wasn’t just a statistical blip. Jetstar, Qantas, and Virgin Australia beat the long-term industry average of 80.7 percent. Virgin Australia, in particular, set a post-2022 benchmark with on-time arrivals of 84.4 percent in April and 84.8 percent in May.
“This improvement in on-time performance is good news for travellers as they can have more confidence that their flight will arrive at their destination at the time they booked,” Ms Brakey said.
The ACCC credited this turnaround to “a collective effort” by airlines, airports, and Airservices Australia, the national air traffic controller.
Source: BITRE, On-time performance time series – June 2025. Qantas figures include QantasLink, and Virgin Australia figures include VARA.
Note: A flight is considered on-time if it arrives within 15 minutes of the scheduled arrival time shown on the airline’s schedule.
Cancellations Still a Sore Point for Qantas
Cancellation rates, too, have dipped, at least for most carriers. April and May’s figures sat below the long-term average of 2.2 per cent, before a slight June uptick to 2.4 percent. Virgin Australia and Jetstar excelled here, cancelling just 0.7 percent of flights in April.
Qantas, however, continues to occupy the wrong end of the cancellation leaderboard, with rates more than double those of its low-cost sibling Jetstar and rival Virgin over the June quarter.
| Airline | April 2025 | May 2025 | June 2025 |
|---|---|---|---|
| Qantas | 2.7% | 2.9% | 3.5% |
| Jetstar | 0.7% | 1.3% | 1.1% |
| Virgin Australia | 0.7% | 0.8% | 1.6% |
| Rex | 1.9% | 3.0% | 2.3% |
The Frequent Flyer Fine Print
This quarter’s report also examined frequent flyer programs, which tend to spark heated debates over dinner tables and in airport lounges.
As of December 2024, Qantas Frequent Flyer had 17 million members, while Virgin Australia’s Velocity Frequent Flyer counted 12.9 million. These programs rake in serious revenue for airlines, encouraging loyalty through the promise of upgrades, lounge access, and reward flights.
However, the ACCC warns that not all that glitters is gold.
“While these programs can offer appealing benefits to consumers, they also come with certain drawbacks that consumers should consider before preferencing a particular airline in pursuit of points and status credits,” Ms Brakey said.
Her advice is blunt: think carefully about the real value of your points. Redemption rates can vary wildly, points can expire, and availability for reward seats isn’t guaranteed.
Four things to keep in mind:
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Redemption value – Upgrades usually give better bang for your points than economy flights.
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Points devaluation – Airlines can suddenly raise the points needed for a reward.
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Expiry dates – Inactivity can see your points vanish into thin air.
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Seat availability – Airlines limit when and where you can use those points.
A Watchdog With Its Eye on the Skies
The ACCC’s renewed scrutiny stems from a November 2023 Treasurer directive ordering the commission to monitor domestic air travel prices, costs, and profits for three years. Quarterly reports are part of the deal.
For the record, Rex — currently in voluntary administration — is still flying, with the government guaranteeing regional bookings during its financial turbulence.
The regulator’s message is clear: while the return to pre-pandemic passenger numbers is a sign of a healthy demand rebound, airlines still need to improve pricing, availability, and transparency.
And for passengers? The moral is equally clear — shop smart, read the fine print, and keep a healthy scepticism when an airline’s marketing promises the world in exchange for a few more status credits.
The Bottom Line
Australian domestic aviation finds itself at a crossroads. Demand is back with a vengeance, but supply — in the form of actual seats — is still playing catch-up. Fuel is cheaper, but airfares are stubborn. Reliability has improved, but cancellation rates show there’s still turbulence ahead for some carriers.
The next six months will be telling. If Qantas and Virgin deliver on their aircraft expansion plans and competition stiffens in a post-Tigerair market, travellers may finally see the balance tip in their favour. Until then, passengers might want to brace for full flights, high prices, and the occasional reminder that, in aviation, patience isn’t just a virtue, it’s practically a carry-on essential.
By Susan Ng
