Aussies slugged sky-high airfares to fly to their nearest capital city

Domestic airfares have skyrocketed around the nation, with residents in regional and remote parts of Australia paying in excess of $1200 to fly return to their nearest capital city.

The government’s $80m lifeline to regional airline Rex is unlikely to offer any relief to consumers.

Flights on metro services increased 13.3 per cent on average after Rex pulled out of flying to major cities in Australia in July.

On Tuesday, the government announced it would extend the voluntary administration process and granted tens of millions of dollars to the airline so it could continue servicing regional and remote areas.

On the same day, the ACCC issued a report showing domestic airfares had soared, with flights between Adelaide and Melbourne jumping 95 per cent after Rex stopped flying between major cities.

The embattled airline entered voluntary administration earlier this year just weeks after it started servicing major cities.

It was revealed the company owed about $500m in debts, and 600 workers lost their jobs.

ACCC commissioner Anna Brakey said the spike in domestic airfares corresponded with a less competitive market. In contrast, the average cost of international economy airfares from Australia decreased between 5 to 10 per cent at the same time.

“Passengers were no longer able to access the lower fares that Rex offered, and airline seating capacity decreased following Rex’s exit,” she said.

“This in turn has contributed to higher airfares.”

Qantas and Virgin service 98 per cent of domestic passengers and are the only two airlines that service most of Australia’s domestic routes.

Ms Brakey said Rex’s as a third competing airline group on services between major cities might have longer-term impacts on the domestic aviation sector.

She said the domestic market had become further concentrated and it could be some time before a new airline emerged.

“With less competition, there is less choice for consumers and less incentive for airlines to offer cheaper airfares and more reliable services,” Ms Brakey said.

The high price of domestic flights is not just limited to the major cities. Residents in regional and remote parts of Australia are also being slugged huge airfares to fly to the nearest capital city.

In Western Australia, the government introduced a scheme in 2022 to reduce flight costs for residents in 18 regional and remote areas across the state.

Prior to the scheme, people were paying up to $1000 to fly return to Perth.

The scheme has cost taxpayers $105m and ensures one-way airfares are capped at a maximum ticket price of $199 for flights less than 1000km from Perth or $299 for flights more than 1000km from Perth and is funded until June next year.

Queenslanders living in regional and remote parts of the state are also paying sky high airfares to travel to and from Brisbane.

Qantas, Virgin Australia and Rex service areas like Mount Isa, Longreach and Roma and charge customers in excess of $1200 to fly return to Brisbane on some flights.

Residents are fed up with the high cost to fly to their nearest capital city, with one Queenslander who lives 3½ hours from Mount Isa speaking out about a service they say is getting “worse and worse”.

Sarah Acton lives on a cattle station at Julia Creek and runs the local post office for a town of about 400 people more than 1600km northeast of Brisbane.

She has been travelling to Queensland’s capital every two to four weeks with her son, who is part of clinical trial, at a cost of about $1200 each every time they fly return from Mount Isa.

Ms Acton said the straw that broke the camel’s back was Qantas swapping the Boeing 737 on the Mount Isa to Brisbane route for an Embraer 190 aircraft.

She said passengers now had an extended flight time and no wi-fi capacity. Coupled with the drive to Mount Isa airport, it was quite a significant commute to reach Brisbane, she said.

“It is a long time to sit there not being productive,” Ms Acton said.

While Qantas said it had increased flights between the two cities, capacity had been reduced since it started using the E190 aircraft.

A Qantas spokesperson said on peak days there was about 15 per cent more capacity than the previous schedule, but overall, there had been about a 4 per cent reduction to capacity.

“Since late-October, Qantas has increased the number of flights to Brisbane from 12 to 20 per week on E190 jet aircraft as part of a series of changes to our domestic and regional networks,” the spokesperson said.

“Alliance is an important partner for the Qantas Group and the E190 aircraft have helped us open new routes across Australia as well as service existing routes with more flights.”

But Ms Acton said while Qantas had increased the number of flights to replace the 737, there were still some days when only one flight was available on a smaller aircraft.

“They’re charging an absolute fortune,” she said.

“Just because we live in rural Australia does not mean we should not get the same service as people that live on the east coast.

“They spruce about being the spirit of Australia, but it is the spirit of the east coast if you ask me.”

Kennedy MP Bob Katter said regional Queenslanders paid twice as much for flights than what they should be charged and were being used to subsidise flights where the major airlines had competition.

The veteran MP from regional Queensland said Qantas used its “huge profit margin” to subsidise international flights, but there was no competition within Australia.

“I’ll tell you one thing about Qantas, it ain’t the spirit of Australia,” he said.

“(Alan) Joyce might be gone, but his spirit lives on and that spirit is not the spirit of Australia.”

Mr Katter said his father and uncle died because of the “tyranny of distance”, as there were no planes available to get them to urgent medical care. He said that was a huge issue for people living in regional and remote areas.

“In America, you are never any more than 150km from a city with half a million or a million people,” he said.

“Well, 90 per cent of the services here in Queensland are beyond 150km from a big city, so we’re fundamentally different from other countries.”

Traeger MP Robbie Katter is drafting a petition to call for a more affordable and fit-for-purpose service to Mount Isa.

Mr Katter has planned to meet with Queensland’s new transport minister to discuss government intervention options, including a regulated flight to reduce costs for consumers.

A spokesperson for Mr Katter also confirmed he had been in discussions with the national carrier to ensure the concerns of the northwest community were heard and addressed.

Aviation expert Geoffrey Thomas said people living in regional parts of Australia serviced by Rex should be concerned if the airline grounded its aircraft.

Mr Thomas said there was no doubt airlines had to remain competitive otherwise people would stop travelling, but the real issue with Rex was the age of its fleet of aircraft that serviced regional Australia.

“How do you replace all those aeroplanes?” he said.

Mr Thomas said any prospective buyer would look at that fleet of aeroplanes and say, ‘What are we buying?’

“We’re buying the roof, we’re buying some of the infrastructure, we’re buying the pilots and flight attendants, but what makes that airline is the aeroplane and you have to replace them all, that is a major stumbling block,” he said.

While Qantas and Virgin were the likely contenders to buy Rex, Mr Thomas said neither airline had aircraft suitable to fly Rex’s regional routes because they were too big.

“The Saab 340 seats 34 passengers,” he said.

“Virgin don’t have anything like that sort of aircraft and Qantas are getting rid of their smaller planes, but even they are too big.”

Mr Thomas said it would be inevitable the government would have to look at increased subsidies on some of the routes to offset the cost of new aircraft.

“If there is no buyer, the government might put more money into it to keep it going as negotiations continue,” he said.

Ernst and Young administrator Samuel Freeman said the $80m lifeline would help Rex increase the number of operational aircraft and build a stronger network for regional Australia.

“The extension will enable us to continue to operate the regional network while undertaking a business improvement plan to reposition the business for sale,” he said.

“We’re planning to increase the size of the operational fleet while providing greater clarity for the Rex team and investing in strategic growth initiatives.

“Through this plan, we’re looking to increase reliability and capacity on the regional routes.”