Australia watchdog flags capacity ‘stagnation’ amid rise in domestic traffic

Australia’s competition watchdog has urged the country’s domestic carriers to “find other ways” to boost operating capacity, as supply chain issues and delivery delays coincide with a spike in travel demand.

In its latest analysis of domestic airline competition, the Australian Competition and Consumer Commission (ACCC) found that the growth in passenger volume at the end of 2024 outpaced capacity growth.

ACCC data shows that for December, Australian operators flew 5 million domestic passengers – about 3.5% higher year on year, and down 3% against pre-pandemic volumes. Leading the increase were Virgin Australia and low-cost operator Jetstar, who recorded a 15.8% and 11% rise respectively.

By contrast, capacity – measured by the number of seats flown – only inched up 0.5% year on year. Compared to 2019 levels, the total number of domestic seats flown was down 5%.

Again, Jetstar and Virgin Australia were the two operators with the largest increase in seat capacity for December.

The spike in travel demand comes despite the exit of Regional Express (Rex) from mainline jet operations, after the operator went into voluntary administration in July last year.

“While high load factors indicate strong demand and are considered favourably from an airline perspective, they can pose operational challenges that impact passengers. For example, service reliability can be compromised as airlines can lose their ability to respond flexibly to disruptions,” the ACCC states.

The commission says Australian carriers face “further delays” in new aircraft deliveries, which has led to “stagnation in capacity growth”.

To this end, ACCC commission Anna Brakey has called for alternative means to shore up capacity.

“While we recognise that delivery delays for new aircraft have presented significant challenges, we encourage all airlines to find other ways to increase their seating capacity to cater to the growing passenger demand,” she says.