The number of passengers flying domestically in Australia has returned to pre-pandemic levels, but airline seat capacity has not kept pace with demand, the country’s competition watchdog has said.
In its latest domestic airline competition report, the Australian Competition and Consumer Commission (ACCC) found that the number of seats flown in June 2025 was 2.8% lower than in June 2019, despite strong demand. The gap is largely attributed to Tigerair’s 2020 exit from the market and a reduction in regional services by Rex.
“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,” ACCC commissioner Anna Brakey said.
Despite a 12.3% fall in jet fuel prices over the past year, average airfares were slightly higher in June 2025 than a year earlier.
Qantas and Virgin Australia are expected to receive new aircraft in late 2025, with Qantas also redeploying 13 aircraft from its soon-to-close Jetstar Asia unit. However, most new aircraft will first replace older or leased jets before expanding overall capacity.
Service reliability has improved, with domestic on-time arrivals reaching 82.4% in April - the highest in three years - and cancellation rates falling below the long-term average in April and May.
The ACCC also raised concerns about the value of frequent flyer programs, encouraging consumers to weigh potential benefits against flight costs and consider point expiry, reward seat availability, and the risk of points devaluation.