Domestic airfares jumped almost immediately after regional air carriers Rex and Bonza exited capital city routes, new research shows.
The evaporation of competition in the domestic market from July caused a 12.5 per cent spike in the cost of the cheapest airfares, data from the Bureau of Infrastructure and Transport index revealed.
The spike follows the collapse of Bonza in late April and Rex’s August decision to axe capital city routes from its flight network as it entered voluntary administration.
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That means travellers could go from paying $150 to $170 for cheaper fares and from $350 to $400 for more expensive fares.
Former ACCC boss Allan Fels said the impact of competition on ticket prices has been “going on [for] 30 years”.
“It always happens. When there’s a third player in the industry prices go down, when they exit prices go up,” Fels said.
The federal government rate takes a snapshot of ticket prices once a month, but Qantas said the data “does not represent average fares which customers are paying”.
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Flight Centre chief executive Graham Turner said there was “no doubt” domestic airfares now are higher than they were 12 months ago.
“In economy, anywhere from seven to 14 per cent (higher) we’ve noticed in the last few months,” Turner said.
And other fees are creeping higher too.
In three weeks’ time, the cost of changing your flight details on a Qantas flight will be hiked from $99 to $199.
Contrastingly, in more competitive markets like the US, major airlines have scrapped those charges almost altogether.
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