SYDNEY- Virgin Australia (VA) has emerged as Australia’s dominant airline, surpassing long-standing market leader Qantas Airways (QF) in domestic market share at the close of 2024.
The competition watchdog’s (ACCC) latest report reveals Virgin Australia secured 35 percent of the domestic market, edging past Qantas’ 34.6 percent stake.
Virgin Australia Beats Qantas
The shift marks a historic change in Australia’s aviation landscape, as Qantas relinquishes its top position for the first time since early 2022. This development strengthens Virgin Australia’s position for a potential stock market return under Bain Capital’s ownership.
Virgin Australia demonstrated remarkable growth, recording a 15.8 percent increase in domestic passenger numbers compared to December 2023. In contrast, Qantas achieved a modest 3.2 percent growth, while its subsidiary Jetstar (JQ), commanding a 29 percent market share, saw passenger numbers rise by 11.2 percent.
ACCC Commissioner Anna Brakey highlighted the industry-wide challenge of capacity constraints amid surging demand. November 2024 saw metropolitan routes reach unprecedented load factors of 90.4 percent, the highest recorded since the ACCC began tracking this metric in January 2019.
The aviation sector continues to grapple with aircraft delivery delays, prompting the ACCC to urge airlines to explore alternative methods for expanding capacity.
Australian Aviation Market in 2024: In Numbers
Australian airlines experienced robust demand growth throughout 2024, with Virgin Australia leading passenger growth.
Load factors reached unprecedented levels, particularly on major city routes, hitting 90.4% in November 2024, significantly above the 12-month average of 82.9%. Virgin Australia achieved the highest load factor at 93.4%, though these high occupancy rates have reduced network flexibility during disruptions.
Aircraft delivery delays from Boeing and Airbus have forced airlines to maintain older fleets and extend wet lease arrangements, resulting in higher operational costs due to reduced fuel efficiency and increased maintenance requirements. The situation worsened with high inflation rates and a weakened AUD-USD exchange rate.
The competitive landscape shifted significantly with the departure of low-cost carrier Bonza in April and Rex’s withdrawal from major city routes in July 2024. These changes, combined with high-demand events like Coldplay concerts in Sydney and Melbourne, drove airfare increases during October and November.
December 2024 brought some relief as average fare revenue decreased 3.0% year-over-year, with major city routes experiencing the largest decline at 4.4%, followed by remote routes at 2.3% and regional routes at 0.4%. However, the six-month period from July to December 2024 saw major city route fares increase by 13.6%, exceeding growth rates from comparable periods in 2023 and 2019.
Commissioner Brakey emphasized that December’s fare reductions primarily benefited business travelers, as holiday season demand typically drives up leisure travel costs.
Service reliability showed mixed results, with the industry’s cancellation rate improving to 1.8% in December, beating the long-term average of 2.2%. Virgin Australia demonstrated exceptional performance with only 0.6% of flights cancelled. However, on-time performance remained challenging across the industry, with a 74.7% on-time arrival rate in December, falling short of the 80.7% long-term average.
Support for Regional Aviation
The Australian Government has escalated its intervention in the regional aviation sector, acquiring $50 million of Regional Express (Rex) debt from PAG in January 2025. This strategic move prevented the potential liquidation of Rex’s regional operations and preserved essential air services to remote communities.
The government’s commitment extends to an additional $80 million in financing and guarantees for Rex’s regional flight bookings during the administration process. On February 12, 2025, officials announced plans to actively participate in Rex’s sale process, including preparations for a potential Commonwealth acquisition if no buyer emerges.
Aviation industry reforms continue to advance following the Aviation White Paper initiatives. The Sydney Demand Management Scheme Slot Bill passed in November, introduces enhanced oversight of takeoff and landing slots at Sydney Airport. UK-based Airport Coordination Limited will replace Airport Coordination Australia as the new Slot Manager, marking a significant operational transition.
The domestic aviation landscape has undergone a substantial transformation since its 1990 deregulation. While the industry has experienced periods of capacity growth and fare reductions, it has also faced declining service levels and reliability challenges. The fluctuating market dynamics have seen multiple airlines enter and exit, though sustained competition against the established duopoly remains elusive.
The ACCC maintains its position supporting increased airline competition to enhance consumer benefits through improved pricing and choice.
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