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1、Domestic airline competition in AustraliaAugust 2024iiACCC|Domestic airline competition in Australia|August 2024 reportAcknowledgement of CountryThe ACCC acknowledges the traditional owners and custodians of Country throughout Australia and recognises their continuing connection to the land,sea and

2、community.We pay our respects tothem and their cultures;and to their Elders past,present and future.Australian Competition and Consumer Commission Land of the Ngunnawal people 23 Marcus Clarke Street,Canberra,Australian Capital Territory,2601 Commonwealth of Australia 2024This work is copyright.In a

3、ddition to any use permitted under the Copyright Act 1968,all material contained within this work is provided under a Creative Commons Attribution 4.0 Australia licence,with the exception of:the Commonwealth Coat of Arms the ACCC and AER logos any illustration,diagram,photograph or graphic over whic

4、h the Australian Competition and Consumer Commission does not hold copyright,but which may be part of or contained within this publication.The details of the relevant licence conditions are available on the Creative Commons website,as is the full legal code for the CC BY 4.0 AU licence.Requests and

5、inquiries concerning reproduction and rights should be addressed to the Director,Corporate Communications,ACCC,GPOBox 3131,Canberra ACT 2601.Important notice The information in this publication is for general guidance only.It does not constitute legal or other professional advice,and should not be r

6、elied on as a statement of the law in any jurisdiction.Because it is intended only as a general guide,it may contain generalisations.You should obtain professional advice if you have any specific concern.The ACCC has made every reasonable effort to provide current and accurate information,but it doe

7、s not make any guarantees regarding the accuracy,currency or completeness of that information.Parties who wish to re-publish or otherwise use the information in this publication must check this information for currency and accuracy prior to publication.This should be done prior to each publication e

8、dition,as ACCC guidance and relevant transitional legislation frequently change.Any queries parties have should be addressed to the Director,Corporate Communications,ACCC,GPO Box 3131,Canberra ACT 2601.ACCC 08/24_2457www.accc.gov.auiiiACCC|Domestic airline competition in Australia|August 2024 report

9、ContentsGlossary ivKey industry insights and developments 1Key results summary 2Executive summary 31.Introduction 51.1 Government direction to monitor domestic airline services 52.Industry developments 62.1 Rex enters voluntary administration 62.2 Bonza goes into liquidation 82.3 Sydney recovery con

10、tinues to lag post-pandemic 92.4 Demand for international travel continues to increase 102.5 Qantas and Perth Airport reach landmark commercial agreement 112.6 Government commences process to appoint Slot Manager at Sydney Airport 112.7 Airservices Australia lodges amended proposal for price increas

11、es 123.Industry activity and reliability of performance 133.1 Bonzas exit reduces passenger levels and capacity in the last quarter of 202324 133.2 Industry service reliability moves closer to long-term averages 154.Competition 174.1 Rexs withdrawal from intercity routes would mean no routes service

12、d by more than 2 airline groups 175.Airfares and jet fuel prices 195.1 Airfares have trended lower in 2024,driven by a decrease in fares on Major City routes 195.2 Jet fuel prices continue to trend downwards 236.AircraftfleetmanagementinAustralia246.1 Airlines rely on different aircraft types to ser

13、vice their network 246.2 Australias aircraft fleet is about to go through a transition 276.3 Pandemic-induced supply chain issues continue to impact on airline competitiveness 29ivACCC|Domestic airline competition in Australia|August 2024 reportGlossaryABSAustralian Bureau of StatisticsBITREBureau o

14、f Infrastructure and Transport Research Economics CCACompetition and Consumer Act 2010(Cth)Dry leaseA lease arrangement whereby a lessor provides an aircraft without crew to the lessee.Golden Triangle routesFlights between Sydney,Melbourne and Brisbane airport.Load factorThe total number of passenge

15、rs as a proportion of the total number of seats flown across all airlines.Low-cost carrier(LCC)Airlines that specialise in keeping operating costs low and without some of the more traditional amenities such as in-flight meals included in the fare,meaning they can potentially offer lower airfares.Maj

16、or City routesClassified using the ABS Australian Statistical Geography Standard Edition 3(ABS 2021 version).Routes where both airports are in Major Cities of Australia.Refer to Appendix for a detailed list of Route Type.QantasQantas domestic passenger airlines that include Qantas Domestic and Qanta

17、sLink airlines.Qantas GroupQantas Domestic,QantasLink and Jetstar Domestic airlines.Regional routesClassified using the ABS Australian Statistical Geography Standard Edition 3(ABS 2021 version).Routes where at least one airport is in Inner Regional Australia or Outer Regional Australia,but not in Re

18、mote or Very Remote Australia.Refer to Appendix for a detailed list of Route Type.Regular Public Transport(RPT)All air service operations in which aircraft are available for the transport of members of the public and are conducted in accordance with fixed schedules.It does not include charter or oth

19、er non-scheduled operations.Remote routesClassified using the ABS Australian Statistical Geography Standard Edition 3(ABS 2021 version).Routes where at least one airport is in Remote or Very Remote Australia.Refer to Appendix for a detailed list of Route Type.Revenue passenger-kilometres(RPKs)Calcul

20、ated by multiplying the number of revenue passengers travelling on each flight stage,by the distance in kilometres between the ports.Turboprop An alternative to a jet characterised by a propeller-powered engine.In Australia,turboprop aircraft typically service Regional and Remote routes.Virgin Austr

21、aliaVirgin Australia domestic passenger airlines that include Virgin Australia and Virgin Australia Regional Airlines(VARA).Virgin Australia also operated Tigerair until March 2020.Wet leaseA lease arrangement whereby a lessor provides an aircraft with crew to the lessee.1ACCC|Domestic airline compe

22、tition in Australia|August 2024 reportKey industry insights and developmentsRex enters voluntary administrationRex entered voluntary administration,after seeking a trading halt and suspending sales on its intercity jet-serviced routes.Regional,turboprop-serviced routes remained unaffected and contin

23、ue to operate.Government has since announced that it will guarantee regional flight bookings purchased for Rex customers.Bonzas exit reduces domestic passenger levels and capacityBoth domestic passenger and capacity levels had been tracking closely to 2019 levels in the early part of the year.Howeve

24、r the recovery has since declined.This is partly due to the loss of dozens of routes across the east coast of Australia arising from Bonzas suspension of operations and subsequent liquidation.Airfares continue to trend downwardsBoth domestic and international airfares have continued to fall.Compared

25、 to June 2023,average revenue per passenger on domestic routes in June 2024 was lower in both real(-5.2%)and nominal terms(-1.6%).This was driven by falling average fares on Major City routes over the 12-month period.The ACCC will closely monitor airfares on intercity routes following Rexs exit on t

26、hese routes.Airline services have generally been more reliable in recent monthsFor the first time since October 2020,cancellation rates were lower than the long-term industry average(2.2%),at 2.1%in May 2024.Despite increasing slightly in June to 2.5%,cancellation rates across the industry have cont

27、inued to generally trend downward during 2024.Fleet constraints remain a challenge for airlinesGlobal supply chain issues in the aircraft manufacturing sector will continue to present challenges to airlines wishing to expand their capacity,renew ageing fleet or secure parts required for maintenance.

28、Wait times for new-generation engines have grown by 150%,and 35%for legacy engines.2ACCC|Domestic airline competition in Australia|August 2024 reportKey results summaryPassenger market share as at June 2024Qantas 38%Jetstar 25%VirginAustralia32%Rex 5%April4.7m6.3mMay4.6m 6.1mJune4.5m5.9m2.2%3.3%Jets

29、tarQantas1.9%Virgin Australia1.1%RexBusiest domestic routes by passenger levels June 2024SydneyMelbourneAdelaideBrisbaneGold CoastADL MELOOL SYDBNE MELBNE SYDMEL SYD572,279354,691284,879190,564175,7682.5%Industry average2.2%Long-termindustry averagePassenger levels and seatcapacity June 2024Real ave

30、rage revenue per passenger index*Flights cancelled June 2024PassengersCapacity100.05.95.9%94.1Jun-24Jun-1999.35.25.2%94.1Jun-24Jun-23*Index(Jun19=100)3ACCC|Domestic airline competition in Australia|August 2024 reportExecutive summary The countrys third largest operator of passenger services Rex ente

31、red voluntary administration on 30 July 2024.It cancelled flights on its intercity routes,but administrators Ernst&Young said that Rexs regional routes would continue to operate.Rex has been connecting regional communities for over 20 years using turboprop(SAAB 340)aircraft.As at June 2024,it servic

32、ed 33 regional and remote routes,including 20 routes on which it was the only airline.In March 2021,Rex expanded into intercity routes serviced by jet(Boeing 737)aircraft by offering competitive fares on routes to and from Melbourne and Sydney.The expansion of its jet-based services continued in fol

33、lowing years with offerings to Adelaide,Brisbane,Canberra,the Gold Coast and more recently Perth.However,the expansion did not prove to be as successful as anticipated.In addition to experiencing aircraft shortages and pilot attrition,the airline was not able to grow its share of the total domestic

34、market much beyond 5%.In February 2024,Rex reported a statutory after-tax loss of$3.2 million for the 6 months ending 31 December 2023.Should Rexs intercity services not re-commence,consumers would miss out on the competition that Rex provided with Qantas,Jetstar and Virgin Australia on its jet-base

35、d intercity routes.The expansion of Rex and the launch of Bonza in recent years has meant that a sizeable proportion of passengers flying on Australian domestic routes benefited from competition between at least 3 competing airline groups.However,the collapse of Bonza and the withdrawal of Rex from

36、intercity routes would mean that no route will have more than 2 competing airline groups.Airfares are generally lower where there is more competition on a route.The ACCC found that when Rex entered several intercity routes in 2021,the average airfare paid per passenger across those routes fell by ar

37、ound 25%.1Compared to their 2019 levels,average revenue per passenger on routes with increased competition has been lower than the broader domestic network in every month since February 2023,indicating that competition has resulted in lower airfares over that period.This was driven by Rexs expansion

38、 on to Major City routes from 2021.The ACCC will continue to closely monitor airfares on intercity routes.While their circumstances are different,Rexs news follows the decision of creditors to put Bonza into liquidation in early July 2024.Bonza entered voluntary administration in late April 2024 and

39、 there were ultimately no binding offers from potential buyers through June.Although Bonza only represented around 2%of the domestic air passenger market,its collapse has resulted in the loss of dozens of routes across the Australian domestic network.Bonzas collapse after just over 12 months of oper

40、ations along with the possible loss of Rexs intercity services mean that competition would be further reduced in the industry.It also highlights the significant challenges faced by new and expanding airlines in this sector.Total domestic passenger levels and seat capacity in the first 3 months of 20

41、24 was actually tracking closely to pre-pandemic(2019)levels.However,June 2024 saw capacity levels decrease by up to 3.2%relative to 2019,largely due to the collapse of Bonza.1 ACCC,Airline Competition in Australia Report 7:March 2022,ACCC,p 17.4ACCC|Domestic airline competition in Australia|August

42、2024 reportAside from some one-off events,industry cancellation rates and on-time arrivals also tracked closer to long-term averages.In May 2024,2.1%of flights were cancelled across the industry,representing the first month that it out-performed the long-term industry average(2.2%)since October 2020

43、.Cancellation rates in June did increase to 2.5%,but overall,the trend shows improved reliability over the last 12 months.Industry on-time arrival rates were also relatively stable at 76.8%in June 2024.Despite remaining below the long-term industry average(80.9%)they have improved from 69.0%in June

44、2023.Domestic airfares have continued to trend downwards throughout the first half of 2024,with average revenue per passenger reducing in both real(-5.2%)and nominal(-1.6%)terms since June 2023.This was driven by falling average fares on Major City routes.The domestic aviation industry is facing cha

45、llenges with ageing fleet,but airlines are starting to bring on new aircraft to replace or add to their existing fleet.For example,Qantas has introduced Airbus A220s on some domestic routes,as well as announcing a renewal of their turboprop fleet for regional routes.Jetstar has started flying some o

46、f its new Airbus A321 NEOs and Virgin Australia has plans to renew their Boeing fleet,although it has experienced between 6 and 18 months of delays.Persisting global supply chain issues across the aircraft manufacturing sector impacted on Rexs ability to compete and will continue to present challeng

47、es to airlines that wish to renew or repair aircraft fleet.Bain&Company has estimated that wait times for new-generation engines have increased by 150%,while times for legacy engines have increased by 35%.Some experts anticipate that these issues will continue for the remainder of the decade.5ACCC|D

48、omestic airline competition in Australia|August 2024 report1.Introduction1.1 GovernmentdirectiontomonitordomesticairlineservicesThe Australian Competition and Consumer Commission(ACCC)is an independent Commonwealth statutory agency that promotes competition,fair trading and product safety for the be

49、nefit of consumers,businesses,and the Australian community.The primary responsibilities of the ACCC are to enforce compliance with the competition,consumer protection,fair trading and product safety provisions of the Competition and Consumer Act 2010(Cth)(CCA),regulate national infrastructure and un

50、dertake market studies.On 6 November 2023 the Treasurer directed the ACCC to recommence domestic air passenger transport monitoring under subsection 95ZE(1)of the CCA.This follows the direction issued to the ACCC by the former Treasurer,which expired in June 2023.Under the direction the ACCC is to m

51、onitor prices,costs and profits relating to the supply of domestic air passenger transport services for 3 years and to report on its monitoring at least once every quarter.The direction applies until December 2026.In announcing the direction,the Treasurer stated that ACCC market scrutiny will help e

52、nsure airlines compete on their merits and bring to light any inappropriate market conduct should it occur.The Treasurer also said that the direction will assist in providing continued transparency at a time when new and expanding airlines are still trying to establish themselves.2 The ACCCs monitor

53、ing and reporting on the domestic airline industry is separate but related to its enforcement of competition law under Part IV of the CCA.We will prioritise investigations about anti-competitive agreements and practises,and the misuse of market power.We will consider enforcement action where we form

54、 the view that conduct is likely to breach the CCA.Should the ACCC find that the level of competition within the industry is insufficient to meet the needs of consumers or identify anti-competitive behaviour that falls short of thresholds for enforcement action we will recommend potential policy opt

55、ions to government to improve competition.Under section 95ZK of the CCA,the ACCC can compel airlines to give information and produce documents to the ACCC relevant to that airlines supply of domestic air passenger transport services.We have established arrangements for the Qantas Group(including Jet

56、star),Rex and Virgin Australia to voluntarily provide their monthly and quarterly data to the ACCC.3 These airline groups supply close to all regular domestic air passenger services in Australia.On occasion we also seek qualitative information from the airlines,such as Board papers about company str

57、ategy.The ACCC has legislative obligations in relation to its management and disclosure of confidential information.4 In accordance with these obligations the public monitoring reports will present only some of the information collected from the airlines.2 The Hon Dr Jim Chalmers(Treasurer),ACCC dir

58、ected to monitor domestic air passenger services,18 October 2023.3 Arrangements were also made to collect data from Bonza between February 2023 and March 2024 inclusive.4 ACCC,ACCC/AER information policy,4 June 2014.6ACCC|Domestic airline competition in Australia|August 2024 report2.Industry develop

59、ments2.1 RexentersvoluntaryadministrationIn a significant development for the Australian domestic airline sector,Rex airlines entered voluntary administration on 30 July 2024.In the announcement,the airlines administrators Ernst&Young said that Rexs turboprop flights on regional routes had not been

60、affected and would continue to operate.However,the airlines jet-based services connecting major airports had been suspended.Other airlines immediately offered to assist impacted customers.The administrators said that Rex customers with an existing ticket on a flight cancelled due to the administrati

61、on process could transfer their ticket free-of-charge to the 13 overlapping Virgin Australia services.Qantas Group also said that impacted customers could contact Qantas and Jetstar to be reaccommodated on the same route as their original booking at no charge,where they had seats available.Both airl

62、ine groups also said they would look to prioritise opportunities for Rex employees that were impacted by the announcement.On the 15 August 2024,the government announced that it will guarantee regional flight bookings for Rex customers throughout the voluntary administration process.This means that c

63、ustomers are guaranteed to fly or get a full refund if they book a flight during this period.The government reiterated the importance of air service reliability to regional communities.5Where a business enters voluntary administration,consumers ordinary legal rights such as consumer guarantee rights

64、 can be affected.What happens to consumers rights with respect to outstanding bookings,credits,gift cards,refunds and other reimbursements will depend on what happens in the administration process,and the appointed administrators have been providing information for consumers on this to date.The admi

65、nistrators should also provide information for consumers on these things in due course at the conclusion of the administration process.At the time of the initial announcement,the administrators said that Rex and Virgin Australia were exploring opportunities to support regional customers,which includ

66、e Virgin Australia selling Rexs regional services through codeshare or interline arrangements and making Velocity Frequent Flyer benefits available to Rexs regional customers.In February 2024,Rex reported a statutory after-tax loss of$3.2 million for the 6 months ending 31 December 2023.This compare

67、d to a$16.5 million after-tax loss in the prior period.In early June 2024,the company issued a statement that John Sharp had been appointed to chairman from deputy chairman,and Neville Howell,who was the companys chief operating officer,had been appointed chief executive for 2 years.The same stateme

68、nt noted that Lim Kim Hai was removed as its executive chairman after 21 years in the role but has since remained on the board as a director.Rex serviced regional locations exclusively before it expanded onto intercity routes in 2021Prior to the grounding of its jet aircraft,Rex flew to 56 destinati

69、ons across Australia.It commenced operations over 20 years ago as a regional service,servicing locations such as Dubbo,Merimbula and Mount Gambier.Rex also has arrangements with the Queensland and Western Australian 5 The Hon Catherine King MP,Flight guaranteed for regional Rex customers,media relea

70、se,15 August 2024.7ACCC|Domestic airline competition in Australia|August 2024 reportgovernments to fly certain regional routes exclusively.At June 2024,Rex provides services across 33 regional and remote routes.After Rex entered voluntary administration,this included 20 routes on which it is the onl

71、y airline.The airline has also played an important role in providing competition on some of Australias busiest routes since 2021 when it began offering services using leased Boeing 737 jet aircraft.Rex began offering services to and from Sydney and Melbourne in March 2021,and then expanded its offer

72、ing to Adelaide,Brisbane,Canberra and the Gold Coast.In June 2024,Rex held approximately 5%of the total industry market share across both their jet-serviced and turboprop-serviced routes.Rexs circumstances are different from BonzasAlthough both Rex and Bonza have gone into voluntary administration,t

73、heir circumstances are quite different.Bonza was a new company seeking to bring a new business model to Australia by using low airfares to stimulate demand on routes that were not served by any other airline.Some commentators have suggested that the large aircraft(186 seats)operated by Bonza,particu

74、larly on regional routes,did not support this business model.In contrast,Rex was a long-established regional airline that sought to take advantage of certain circumstances to expand on to larger routes with a new fleet of jet aircraft.For example,Rex used the opportunity to access cheaper aircraft d

75、uring the pandemic,at a time when Virgin Australia was entering administration.6 The administrators have said shortages of pilots and supply chain issues around engine parts were both factors that put Rex in significant debt.A reformed slot scheme at Sydney Airport would have provided some limited a

76、ssistanceBoth Bonza and Rex advocated for reforms to the way that take-off and landing slots were managed at Sydney Airport,saying that they could more effectively compete if they could get better access to peak time slots.Bonza did not include Sydney Airport in its network,while Rex holds slots at

77、the airport for both its regional and now-suspended intercity operations.In February 2024,the Australian Government announced a broad package of reforms to the legislative slot management scheme at Sydney Airport,following a report by former Chair of the Productivity Commission Peter Harris in 2021.

78、The reforms are welcomed and once in place,will help new and expanding airlines obtain slots at the capacity-constrained airport over time.Improved access to slots at Sydney Airport may have assisted Rex in building up its intercity operations.However,Rex going into administration also reflects the

79、broader challenges of expanding an airline beyond the slot scheme.For example,with its limited fleet size relative to incumbent airlines,it is not clear whether Rex would have had sufficient access to additional aircraft,and the associated pilots and crew,should it have been able to obtain the addit

80、ional peak hour slots.Further,due to its regional operations,Rex already held too many slots at the airport to be considered a new entrant under both the current and proposed version of the scheme,which means it would not benefit from any advantages for new entrants in the slot allocation process.6

81、ACCC,Airline competition report in Australia Report 3:March 2021,ACCC,2021.8ACCC|Domestic airline competition in Australia|August 2024 reportImplications for the domestic airline industryThe ACCC is conscious that decisions regarding Rex at this time will be critical for capacity and future competit

82、ion.Should Rexs intercity services not re-commence,consumers would miss out on the competition that Rex provided with Qantas,Jetstar and Virgin Australia on 13 major routes including to and from Sydney,Melbourne,Brisbane,Cairns,Perth,and the Gold Coast.In June 2024,Rexs intercity jet-based services

83、accounted for 2.8%of total industry market share,representing around 125,000 passengers.Airfares are generally lower where there is more competition on a route.In late June 2024,Rex introduced services between Perth and Melbourne,competing with Qantas Group and Virgin Australia.Following the entry o

84、f Rex onto this route,discounted airfares were available at$398,down 25%in real terms from July 2023.7 To promote this service,Rex also offered$99 sale fares Melbourne Perth one-way.8 This sale was then beaten by Virgin Australia within an hour of Rexs sale going live.9A competitive aviation sector

85、is important to all Australians.The ACCC remains engaged with industry so that we can understand and protect competition in this sector.We use data obtained through our role in domestic airline monitoring to identify trends and behaviour in the industry,including that which may damage competition.Th

86、e concentrated nature of the domestic aviation industry reinforces the importance of the ongoing transparency and scrutiny we bring through our monitoring role.We recognise the market position of Qantas Group and therefore pay close attention to both Qantas and Jetstars entry onto routes which are s

87、erved by other operators.Competition and consumer issues in the aviation sector are a stated compliance and enforcement priority for the ACCC.We have investigated a range of concerns across the aviation industry,including those raised by Rex.In particular,we conducted a thorough investigation after

88、Rex raised concerns in late 2020 and early 2021 about Qantas entering regional routes with low passenger numbers that had historically been operated by Rex,and Qantas adding capacity on intercity routes after Rex began operating on these routes.In March 2022,the ACCC concluded its investigation,noti

89、ng that a range of factors impacted the competitive dynamics in the market at the time,particularly the COVID-19 movement restrictions and border closures.The relaxation of these restrictions simplifies evaluating the impact of capacity increases or pricing practices.The ACCC will continue to pay cl

90、ose attention to any behaviour that may be anti-competitive.2.2 BonzagoesintoliquidationIn a meeting held with administrators Hall Chadwick in early July 2024,creditors decided to place low-cost airline Bonza into liquidation.10 This followed the announcement in mid-June 2024 that there were ultimat

91、ely no binding offers from potential buyers,despite multiple extensions of the deadline to submit offers throughout May 2024.7 BITRE Domestic Air Fares(Best Discount)index(cheapest available economy airfares).The price index is weighted across the 70 busiest domestic routes.8 Rex,Rex entices travell

92、ers west with snap$99 fare sale media release,20 June 2024,accessed 19 July 2024.9 R Ironside,Former Rex Chairman moves to reclaim position from directors who voted him out,The Australian,12 July 2024,accessed 25 July 2024.10 Hall Chadwick,2 July Press Release,media release,2 July,accessed 24 July 2

93、024.9ACCC|Domestic airline competition in Australia|August 2024 reportAs a result,Hall Chadwick ultimately issued a statement confirming that over 300 staff had been officially terminated and all future flights cancelled.11Since late April,the competing airlines had offered free flights to Bonza cus

94、tomers and Virgin Australia had assisted travellers who were mid-journey at the time of Bonza suspending its operations.Following the announcement of staff terminations,Qantas,Jetstar12 and Virgin Australia also offered to prioritise hiring Bonza staff for all vacancies.As explored in the last Domes

95、tic Airline Competition in Australia report,13 although Bonza had not had the chance to expand and become a meaningful competitor to the incumbent airlines during its 12 months of operations,it significantly improved connectivity across the domestic network,particularly to regional areas.In March 20

96、24,it serviced 30 routes exclusively,and competed with other airlines on a further 7 routes.With its limited capacity and market share(2%in March 2024)the collapse of Bonza is unlikely to have any immediate impacts on competition in the domestic industry,or on airfares.However,there are likely to be

97、 new entrants and added capacity on some of the routes serviced by Bonza over time.In June 2024,Jetstar announced that it will service Cairns Sunshine Coast from December 2024.14 This will be the first of Bonzas services that has been picked up by a competing airline.It was the most popular of the r

98、outes that were exclusively serviced by Bonza,in terms of both passenger demand and capacity.2.3 Sydneyrecoverycontinuestolagpost-pandemicAlthough the broader domestic airline sector has largely recovered from the pandemic in terms of passengers flying,some routes are faring better than others.Gener

99、ally speaking,routes that represent leisure travel have recovered more strongly relative to routes that cater to significant levels of business travel.Furthermore,routes to and from Sydney have recovered at a slower rate relative to Brisbane and Melbourne.Although Melbourne Sydney is still the busie

100、st route per month in Australia with over 570,000 passengers representing 12.7%of the market,it continues to have the lowest recovery rate of the Golden Triangle routes connecting Sydney,Melbourne and Brisbane.Passenger numbers in June 2024 on Melbourne Sydney were at 87.8%of pre-pandemic levels(Jun

101、e 2019),while Brisbane Sydney levels were at 93.4%of pre-pandemic levels.In comparison Melbourne Brisbane traffic was 3.7%above June 2019 levels(see figure 2 for more details of recovery rates on Major City routes).Outside of the Golden Triangle routes,the lowest recovery rate of the Major City rout

102、es was Canberra Sydney,which in June 2024 had reached just 67.4%of pre-pandemic levels.The sluggish recovery rates on these routes are reflected in seat capacity levels.Capacity levels at Canberra,Sydney and Melbourne airports in June 2024 were down by 11.6%,6.4%and 5.8%respectively from June 2019.H

103、owever,airlines appear to have adjusted their capacity to reflect some of these structural changes in demand.Qantas Group maintained overall seat capacity and increased passenger levels by 1.9%over the last 12 months,but the composition across its 2 airline brands has changed.Since June 2023,Jetstar

104、 has increased its capacity by 9.7%(around 116,000 seats),while Qantas has reduced its capacity by 4.1%(around 101,000 seats).11 Hall Chadwick,11 June Press Release,media release,11 July,accessed 19 June 2024.12 Jetstar,Statement on support for Bonza customers,media release,30 April 2024,accessed 19

105、 June 2024.13 ACCC,Domestic airline competition report in Australia May 2024,ACCC,2024.14 Jetstar,Jetstar announces new flights between Cairns and Sunshine Coast,media release,26 June 2024,accessed 30 July 2024.10ACCC|Domestic airline competition in Australia|August 2024 reportMeanwhile,recovery rat

106、es on other Major City routes surpassed pre-pandemic levels.Routes to and from Perth in June 2024 had increased capacity by 10.5%(87,000 seats)since June 2019.Capacity levels to the Sunshine Coast also increased significantly(by 15.7%),although from a lower base of around 112,000 seats.Following the

107、 collapse of Bonza however,capacity on the Sunshine Coast routes dropped by 34.5%between March 2024 and June 2024,representing around 68,500 seats.152.4 DemandforinternationaltravelcontinuestoincreaseDemand for international travel has continued to grow.Data from the International Air Transport Asso

108、ciation(IATA)showed that globally,revenue passenger kilometres for June 2024 was 9.1%higher than June 2023.16 Separate data from the ABS showed that as at June 2024 short-term arrivals and departures to and from Australia increased by 12.8%compared to June 2023,but remained 2.2%lower than in June 20

109、19.17Notably,the total number of short-term international arrivals into Western Australia increased by 23%in June 2024 compared to June 2023.International airlines have also continued to restore or add capacity,particularly on routes to and from Perth,notably:South African Airways recommenced direct

110、 flights between Perth and Johannesburg in late April.The route lifted capacity from 37%to 61%of prepandemic levels on services between Australia and South Africa.18Qantas introduced direct flights from Perth Paris in July.The new route will operate 4 flights a week over the European summer,Olympic

111、and Paralympic periods before dropping to 3 services a week from mid-August.The service will add 75,000 additional seats between Australia and Europe each year.19 China Southern announced that it will recommence flights from Perth Guangzhou China in November.This service will operate 3 times a week

112、and will deliver 86,000 seats to Perth.20Other additions to capacity from international airlines on routes to and from Australia include:China Eastern commencing 3 flights a week from Nanjing Melbourne at the end of June.The route lifts capacity on services between Melbourne and China to 92%of pre-p

113、andemic levels.21 Beijing Capital Airlines also commenced a new service from Hangzhou Melbourne which began operating 3 times a week in mid-June.22Air New Zealand resuming direct seasonal flights between Cairns and Auckland on 2 April 2024.The route will operate 3 flights a week until 26 October 202

114、4.2315 March 2024 was the last month of data the ACCC received on Bonza.16 IATA,Air Passenger Market Analysis June 2024,accessed 25 July 2024.17 ABS,Overseas Arrivals and Departures,Australia,15 August 2024,accessed 15 August 2024.18 Travel Weekly,South Africa bookings are back in action,30 April 20

115、24,accessed 12 July 2024.19 Qantas,Au Revoir.Paris now just a direct Qantas flight away,media release,14 July 2024,accessed 24 July 2024.20 Perth Airport,Direct services from China return to Perth Airport with China Southern Airlines,media release,27 May 2024,accessed 24 July 2024.21 Melbourne Airpo

116、rt,Victoria connects with sister state as China Eastern expands operations,media release,29 June 2024,accessed 24 July 2024.22 J Nelson,Beijing Capital Airlines first Hangzhou flight arrives in Melbourne,Australian Aviation,17 June 2024,accessed 24 July 2024.23 World of Aviation,Air New Zealand resu

117、mes direct seasonal flights between Cairns and Auckland,10 April 2024,accessed 5 July 2024.11ACCC|Domestic airline competition in Australia|August 2024 reportSingapore Airlines upsizing the aircraft on the Singapore Cairns route.The A350 service will fly 4 days a week on the route and will deliver a

118、round 23,000 additional seats.24Recent data from Flight Centres FCM Travel and Corporate Traveller showed that the average cost of an international economy airfare departing from Australia decreased on average by 13%between January and June 2024.Flights between Australia and Indonesia recorded the m

119、ost significant decline in airfares over this period,falling roughly 17.7%.252.5 QantasandPerthAirportreachlandmarkcommercialagreementIn May 2024,Qantas and Perth Airport reached a$3 billion,12-year commercial agreement for Perth Airport to invest in new terminal facilities and a new parallel runway

120、.This investment forms part of a broader$5 billion capital investment program by Perth Airport which is set to also deliver 2 multi-story carparks,major access roadworks and the airports first hotel.This new agreement will position Perth to become the airlines second biggest international gateway be

121、hind Sydney.26Perth currently has 2 separate international terminals on either side of the airports landing strip,requiring a 15-minute drive for travellers transiting between them.Under the new agreement,Qantas and Jetstar will relocate to the new terminal and plan to add 4.4 million seats each yea

122、r to and from Perth by the time the new terminal opens in 2031.This planned growth will transition the state into a major domestic and international hub for the airlines.The landmark agreement resolves outstanding commercial issues between Qantas and Perth Airport including a long court battle over

123、fees and capital costs.27Perth Airport will undergo significant changes in preparation for the construction of the new facilities.The first change involves relocating Jetstars domestic services to Terminal 2 from 2 September.282.6 GovernmentcommencesprocesstoappointSlotManageratSydneyAirportThe refo

124、rms to the Sydney Airport Demand Management Scheme,which the government announced in February 2024,seek to improve the schemes compliance and enforcement framework and ensure that slots at the airport are allocated in a more competitive manner.On 5 August 2024,the government commenced a competitive

125、tender to appoint a new Slot Manager at Sydney Airport,which is one of the proposed reform measures.The new Slot Manager will need to demonstrate how they manage and mitigate conflicts of interest and comply with a statement of expectations,including governance and transparency requirements.2924 Cai

126、rns Airport,Singapore Airlines launches A350 Service to Cairns in boost to Tropical North Queensland,media release,3 April 2024,accessed 5 July 2024.25 R Ironside,Overseas travel getting cheaper as fares fall for the fourth consecutive quarter,The Australian,24 July 2024,accessed 25 July 2024.26 Per

127、th Airport,Qantas and Perth Airport reach landmark agreement,media release,31 May 2024,accessed 19 June 2024.27 A Whitley,Perth to be a Qantas hub under$3b peace deal,Australian Financial Review,31 May 2024,accessed 19 June 2024.28 Perth Airport,Passengers encouraged to plan their journey with major

128、 construction works to begin,media release,12 August 2024,accessed 12 August 2024.29 The Hon Catherine King MP,Albanese Government strengthens aviation competition at Sydney Airport media release,5 August 2024.12ACCC|Domestic airline competition in Australia|August 2024 reportThe ACCC considers that

129、 reforms to the Sydney Airport Demand Management Scheme,if implemented effectively,would help support greater airline competition,and therefore,improved consumer outcomes.The measures should make it more difficult for airlines to hold on to more slots than they need at a capacity-constrained Sydney

130、Airport,meaning more slots will become available for new and expanding airlines.2.7 AirservicesAustralialodgesamendedproposalforpriceincreasesThe ACCC is currently assessing a proposal from Airservices Australia to increase prices for airlines for its flight navigation,air traffic control and aviati

131、on rescue and fire-fighting services.Airservices submitted an initial draft price notification to the ACCC in September 2023 covering the period from 202324 to 202627 and proposing price increases totalling 19%.Airservices submitted a revised draft notification in November 2023 removing 202627.The A

132、CCC sought stakeholder views via an issues paper based on the revised draft notification.On 10 July 2024,Airservices submitted a letter outlining further amendments to its draft price notification,following stakeholder and ACCC feedback.The July 2024 proposal specifies a revised 6%price increase.Air

133、services said that if this price increase is most readily expedited by having regard to only the period from 202425 to 202526,Airservices would be happy for the ACCC to assess the proposal on that basis.Airservices has also provided revised operating expenditure and air traffic forecasts.The ACCCs a

134、ssessment of Airservices draft price notification will be based on the amendments in the 10 July 2024 letter.The ACCC will consult with stakeholders on this proposal as part of the upcoming preliminary views paper,expected to be published at the end of August 2024.The ACCCs role is to advise whether

135、 or not it objects to the proposed price notification.13ACCC|Domestic airline competition in Australia|August 2024 report3.Industry activity and reliability of performanceThis chapter discusses domestic airline passenger numbers,seat capacity and rates of flight cancellations and delays.The Qantas G

136、roup(comprising Qantas and Jetstar),Rex,Virgin Australia(including Tigerair until June 2020)and Bonza(until March 2024)supplied the ACCC monthly passenger and seat capacity data up to June 2024 to inform our analysis in section 3.1.Section 3.2 uses Bureau of Infrastructure and Transport Research Eco

137、nomics(BITRE)data up to June 2024 to analyse cancellation rates and on-time performance.3.1 Bonzasexitreducespassengerlevelsandcapacityinthelastquarterof202324The collapse of Bonza has led to a reduction in aeronautical activity in recent months.This was followed by news of Rex entering voluntary ad

138、ministration and terminating its intercity services,however the impact of Rexs circumstances on passenger levels will be different.While Bonza stimulated new traffic on unserved routes with low fares,passengers who would have flown with Rex will likely switch to another airline,bringing less of an i

139、mpact to overall passenger levels.Figure 1 shows the monthly passenger levels and seat capacity for 2019,2023 and 2024.It illustrates reductions in activity levels from April to June 2024,with June 2024 levels aligning closely with June 2023.Figure 1:Monthly passenger levels and seat capacity 2019,2

140、023 and 2024Jan FebMar AprMayJunJulAugSepOctNov DecJan Feb Mar Apr May JunJul Aug Sep Oct Nov DecMillionsPassengersSeat capacity2019202320240123456701234567Source:Data collected by the ACCC from Bonza,Jetstar,Qantas,Rex and Virgin Australia.14ACCC|Domestic airline competition in Australia|August 202

141、4 reportWhile passenger and seat capacity numbers had been tracking at 2019 levels for the first 3 months of 2024,both have dropped away in more recent months.The relatively lower levels from April to June is in addition to the seasonal decline in demand and can be partly attributed to the collapse

142、of Bonza,which had accounted for about 2%of the market in March 2024.Australias major airlines carried close to 4.5 million domestic passengers in June 2024.This represented 97.8%of June 2019 levels and was consistent(0.3%lower)with June 2023 levels.The airlines flew around 5.9 million seats in June

143、 2024,which was 3.2%below the seat capacity level recorded in June 2019.This represents around 55,000 less seats(or 0.9%less capacity)than June 2023,when the industry was still considered to be recovering.The industry-wide average load factor,measured by the percentage of available seats filled by p

144、assengers,has also tracked generally along pre-pandemic levels.In June 2024 the load factor was 76.5%,which was half a percentage point higher than in June 2023 and 0.8 percentage points higher than in June 2019.Figure 2 ranks routes connecting Major Cities by the degree to which they have recovered

145、 to pre-pandemic levels of passengers(June 2019).Of these,9 routes exceeded 100%of pre-pandemic passenger levels,including 7 routes to and from the Gold Coast,and Perth.Figure 2:Passenger levels on routes connecting Major Cities June 2019 compared to June 2024PassengersPassenger recovery(%)%of June

146、2019June 2019June 2024CBR SYDAVV SYDCBR MELMEL SYDPER SYDMEL PERBNE SYDADL MELADL CBRCBR PEROOL SYDADL SYDBNE CBRADL PERAVV OOLADL BNEBNE MELMEL OOLBNE PEROOL PERADL OOLCBR OOL0100,000300,000500,000700,0000%20%40%60%80%100%120%140%160%328.1%Source:Data collected by the ACCC from Bonza(up to March 20

147、24),Jetstar,Qantas,Rex and Virgin Australia.Note:Virgin Australia data for 2019 includes data for Tigerair.15ACCC|Domestic airline competition in Australia|August 2024 report3.2 Industryservicereliabilitymovesclosertolong-termaveragesReliability of services in the domestic industry has continued to

148、improve over recent months with cancellation rates trending towards long-term industry averages.Figure 3 shows the monthly cancellation rates,that is flights cancelled 7 days before the departure date,for each of the monitored airlines compared to the industry average.It does not include the cancell

149、ation of flights by Bonza after its collapse in April due to the unavailability of data.Figure 3:Airline cancellation rates June 2022 to June 2024QantasJetstarVirgin AustraliaRexBonza Industry averageIndustry long-term averageCancellation rate(%)02468101214161820Jun22Jul22Aug22Sep22Oct22Nov22Dec22Ja

150、n23Feb23Mar23Apr23May23Jun23Jul23Aug23Sep23Oct23Nov23Dec23Jan24Feb24Mar24Apr24May24Jun24Source:BITRE,On-time performance time series June 2024;data collected by the ACCC from Bonza(up to March 2024).Qantas figures include QantasLink and Virgin Australia figures include VARA.Note:A flight is regarded

151、 as a cancellation if it is cancelled or rescheduled less than 7 days prior to its scheduled departure time.In May 2024 the industry cancelled 2.1%or close to 1,000 flights.This represented the first time that the industry cancellation rate was better than the long-term industry average of 2.2%since

152、 October 2020.Despite worsening slightly in June 2024 to 2.5%,cancellation rates across the industry have stayed closer to the long-term average in Q4 of 202324.The ACCC considers that the results in May demonstrate the industry is capable of out-performing the long-term industry average and we will

153、 continue to watch this closely.Airlines have said that a fuel supply issue at Perth Airport and significant weather events on the east coast contributed to slightly higher cancellation rates in June 2024 compared to previous months.On 1 June 2024 Perth Airport lost access to jet fuel for 15 hours d

154、ue to a load pressure issue within the fuel supply system.At least 44 domestic flights were cancelled or delayed as a result.30 Qantas recorded the highest cancellation rate in June 2024 at 3.3%,followed by Jetstar at 2.2%and Virgin Australia at 1.9%.Rex recorded the lowest cancellation rate amongst

155、 the airlines at 1.1%.30 H Cross,Perth Airport cancellations:Full list of flights impacted by major fuel issue,PerthNow,1 June 2024,accessed 12 August 2024.16ACCC|Domestic airline competition in Australia|August 2024 reportDespite the overall improvement in airline cancellation rates over recent mon

156、ths,some major domestic routes have continued to perform poorly.In June 2024 cancellation rates were relatively high on flights between Sydney and Melbourne(5.8%),Sydney and Canberra(5.0%)and Adelaide and Perth(4.3%).Figure 4 shows that on-time arrival rates also improved in the quarter to June 2024

157、.Despite the improvement,the rate of flights that arrived on time in June(76.8%)remained below the long-term average of 80.9%and represented more than 10,000 flights arriving more than 15 minutes late.Figure 4:Airline on-time performance rates(arrivals)June 2022 to June 2024Ontime performance rate(a

158、rrivals)(%)0102030405060708090Jun22Jul22Aug22Sep22Oct22Nov22Dec22Jan23Feb23Mar23Apr23May23Jun23Jul23Aug23Sep23Oct23Nov23Dec23Jan24Feb24Mar24Apr24May24Jun24QantasJetstarVirgin AustraliaRexBonza Industry averageIndustry long-term averageSource:BITRE,On-time performance time series June 2024;data colle

159、cted by the ACCC from Bonza(up to March 2024).Qantas figures include QantasLink and Virgin Australia figures include VARA.Note:A flight is considered on-time if it arrives within 15 minutes of the scheduled arrival time shown on the airlines schedule.Qantas reported the highest on-time performance a

160、mongst the monitored airlines in June 2024 at 78.5%,followed by Rex(75.9%)and Virgin Australia(74.8%).Jetstar reported the lowest on-time performance with 73.6%of flights arriving on time.This was a significant decline from 80.9%in March 2024.In June 2024,Qantas introduced Group Boarding which allow

161、s travellers to board the aircraft within smaller groups rather than queuing up with all passengers at the same time.It aims to make the boarding process more efficient to prevent departure delay.Qantas hopes the new process will improve on-time performance,following successful trials at Brisbane,Sy

162、dney,Melbourne and Perth airports.3131 Qantas,Group 1,please come forward:Qantas rolls out new boarding process,media release,3 June 2024,accessed 24 July 2024.17ACCC|Domestic airline competition in Australia|August 2024 report4.Competition This chapter discusses domestic airline competition and use

163、s the number of routes operated by the 4 airline groups and domestic passenger market share by airline.As with chapter 3,Qantas Group,Rex and Virgin Australia have supplied the ACCC with monthly data up to June 2024 to inform this analysis.The ACCC only has data from Bonza for up to March 2024 even

164、though it operated services until the end of April 2024.The 2 airlines within the Qantas Group(Qantas and Jetstar)are not considered to be in competition with each other.4.1 Rexswithdrawalfromintercityrouteswouldmeannoroutesservicedbymorethan2airlinegroupsIn recent years the expansion of Rex and the

165、 launch of Bonza meant that a sizeable proportion of passengers flying on Australian domestic routes benefited from competition between at least 3 competing airline groups.However,the collapse of Bonza and the withdrawal of Rex from intercity routes means that no route will have more than 2 competin

166、g airline groups.Figure 5 shows the proportions of passengers that travelled on routes with 1,2,3 or 4 different airline groups up until June 2024.For the past 12 months,routes serviced by 3 airline groups represented the largest share of domestic passengers,at 50%in June 2024.Between November 2023

167、and April 2024,for the first time in Australia there was a route(Melbourne Gold Coast)with 4 competing airline groups,representing around 4%of domestic passengers.Figure 5:Share of passengers on routes serviced by 1,2,3 and 4 airline groups January 2021 to June 2024Share of monthly passengers(%)1 ai

168、rline group2 airline groups3 airline groups01020304050607080904 airline groupsJan21Mar21May21Jul21Sep21Nov21Jan22Mar22May22Jul22Sep22Nov22Jan23Mar23May23Jul23Sep23Nov23Jan24Mar24May24Jun24Source:Data collected by the ACCC from Bonza(up to March 2024),Jetstar,Qantas,Rex and Virgin Australia.Note:Airl

169、ine groups comprise Qantas Group(including Jetstar),Virgin Australia,Rex and Bonza(up to March 2024).18ACCC|Domestic airline competition in Australia|August 2024 reportWhile not yet shown in the chart,this dynamic will change significantly with the collapse of Bonza in April and Rex ceasing its inte

170、rcity operations in late July.Even though both Bonza and Rex provided relatively limited capacity on competing routes,the exit of both airlines may have consequences for passengers in terms of higher airfares and reduced choice.The Bonza and Rex developments have less significance for the distributi

171、on of passenger market share between the domestic airlines.Figure 6 shows that Bonza only accounted for 2%of the market prior to its exit.Rex held a 4.6%passenger market share in June 2024,of which its now ceased jet-serviced routes accounted for 2.8%.Figure 6:Airline passenger market shares across

172、all domestic routes June 2022 to June 2024Market share(%)Qantas GroupQantasJetstarVirgin AustraliaRexBonza0%10%20%30%40%50%60%70%Jun22Aug22Oct22Dec22Feb23Apr23Jun23Aug23Oct23Dec23Feb24Apr24Jun24Source:Data collected by the ACCC from Bonza(up to March 2024),Jetstar,Qantas,Rex and Virgin Australia.For

173、 2 years to June 2024,market shares had remained relatively stable.Qantas Group(comprising of Qantas and Jetstar)continued to carry a majority of passengers(63.1%)in June 2024,followed by Virgin Australia(32.3%).Compared to June 2023,Jetstars market share increased 2.2%percentage points to 25.3%,Qan

174、tas market share decreased 0.8%to 37.9%,and Virgin Australia gained 0.4%to 32.3%.Rexs market share(4.6%)did not change between June 2023 and June 2024.The fall in Jetstars market share between April and June 2024 reflects the lower seasonal demand for the low-cost carriers leisure-based service rout

175、es.Over the same period,Qantas and Virgin Australias market shares increased,reflecting a shift in market demand to corporate travel.19ACCC|Domestic airline competition in Australia|August 2024 report5.Airfares and jet fuel pricesThis chapter discusses trends in domestic airfares and the price of je

176、t fuel.The cost of jet fuel is a major contributor to ticket prices.The Qantas Group(comprising Qantas and Jetstar),Rex and Virgin Australia have supplied the ACCC with monthly data up to June 2024 to inform our analysis of average revenue per passenger in section 5.1.This section also draws on BITR

177、E airfare data up to July 2024.The jet fuel data in section 5.2 is current to June 2024.5.1 Airfareshavetrendedlowerin2024,drivenbyadecreaseinfaresonMajorCityroutesAverage revenue per passenger reflects movements in airfares across all types of domestic tickets and fare classes.Much of the analysis

178、in this section is based on changes in real prices,which means they have been adjusted for inflation.Figure 7 shows average revenue per passenger to June 2024,represented as an index to show changes relative to June 2019.In June 2024 average fare revenue was 5.9%lower than June 2019 when adjusted fo

179、r inflation,but 13.8%higher in nominal terms.Figure 7:Index of average fare revenue per passenger June 2019 to June 2024Index(Jun19=100)020406080100120140160NominalRealJun19Aug19Oct19Dec19Feb20Apr20Jun20Aug20Oct20Dec20Feb21Apr21Jun21Aug21Oct21Dec21Feb22Apr22Jun22Aug22Oct22Dec22Feb23Apr23Jun23Aug23Oc

180、t23Dec23Feb24Apr24Jun24Source:ACCC calculations using data from the ABS and data collected by the ACCC from Bonza(up to March 2024),Jetstar,Qantas,Rex and Virgin Australia.Note:(1)Average revenue per passenger includes both economy and business fare revenue.It excludes data associated with ancillari

181、es,such as baggage fees,fees for seat selection and food and drink sold on board.(2)Data has been adjusted for inflation using ABS CPI quarterly data up to June 2024.(3)Grey bars indicate December and Easter holiday periods.20ACCC|Domestic airline competition in Australia|August 2024 reportAverage f

182、are revenues have trended lower in the first half of 2024.Compared to June 2023,average revenue per passenger was lower in both nominal terms(-1.6%)and real terms(-5.2%),driven down by falling average fares on Major City routes,as per Figure 8.Figure 8 shows the trend in average monthly airline reve

183、nue per passenger since June 2019 by route type(Major Cities,Regional,and Remote).Average revenue per passenger levels fluctuated most on Major City routes,falling to as low as 52%of the June 2019 level in January 2022 when airlines offered low fares to stimulate the post-COVID recovery.In June 2024

184、,average real revenue per passenger levels on Major City routes were at 87.6%of the June 2019 price level,falling through 2024 due to lower fares on some east-west routes,and Gold Coast routes.Figure 8:Index of average real fare revenue per passenger by route type:June 2019 to June 2024Index(Jun19=1

185、00)Major CitiesRegionalRemote020406080100120140160Jun19Aug19Oct19Dec19Feb20Apr20Jun20Aug20Oct20Dec20Feb21Apr21Jun21Aug21Oct21Dec21Feb22Apr22Jun22Aug22Oct22Dec22Feb23Apr23Jun23Aug23Oct23Dec23Feb24Apr24Jun24Source:ACCC calculations using data from the ABS and data collected by the ACCC from Bonza(up t

186、o March 2024),Jetstar,Qantas,Rex and Virgin Australia.Note:(1)Average revenue per passenger includes both economy and business fare revenue.It excludes data associated with ancillaries,such as baggage fees,fees for seat selection and food and drink sold on board.(2)Data has been adjusted for inflati

187、on using ABS CPI quarterly data up to June 2024.(3)Grey bars indicate December and Easter holiday periods.Average revenue per passenger in nominal terms are not shown on the chart,but on Major City,Regional,and Remote routes were 6%,27%,and 18%higher respectively in June 2024 compared to June 2019.A

188、verage revenue per passenger levels have increased through 2024 on Regional routes,with revenue per passenger increasing on several regional Queensland routes.At June 2024 the regional revenue per passenger index was at 105.2%of the June 2019 level in real terms.On Remote routes,the index was at 97.

189、3%of the June 2019 level.Average real revenue per passenger on Major City and Regional routes fluctuate month-to-month within similar revenue ranges.However average revenue per passenger on Remote routes are typically around 50%higher,because many of these routes do not have sufficient passenger vol

190、umes to allow economical use of larger aircraft.Airfares have not increased significantly since June 2019 on those routes where at least one additional airline group has serviced the route since 2023.Figure 9 shows the change in average real revenue per passenger relative to June 2019 levels.It comp

191、ares routes with increased competition since January 2023 relative to 2019,with all routes continually serviced since 2019.21ACCC|Domestic airline competition in Australia|August 2024 reportFigure 9:Index of average real fare revenue per passenger routes with increased competition and all routes 3-m

192、onth rolling average:June 2019 to June 2024 All continually serviced routesRoutes with more competitors in 20232024 than 2019Index(Jun19=100)020406080100120Jun19Aug19Oct19Dec19Feb20Apr20Jun20Aug20Oct20Dec20Feb21Apr21Jun21Aug21Oct21Dec21Feb22Apr22Jun22Aug22Oct22Dec22Feb23Apr23Jun23Aug23Oct23Dec23Feb2

193、4Apr24Jun24Source:ACCC calculations using data from the ABS and data collected by the ACCC from Bonza(up to March 2024),Jetstar,Qantas,Rex and Virgin Australia.Note:(1)Average revenue per passenger includes both economy and business fare revenue.It excludes data associated with ancillaries,such as b

194、aggage fees,fees for seat selection and food and drink sold on board.(2)Data has been adjusted for inflation using ABS CPI quarterly data up to June 2024.(3)All routes means routes continually serviced since 2019 and does not include regulated routes or multi-hop routes.Compared to price levels on a

195、ll routes continually serviced,routes with increased competition have been subject to more significant price discounting in periods including winter 2021 and summer 202122.Average fare revenue per passenger has also remained lower in all months since February 2023,indicating that increased competiti

196、on has delivered lower prices to consumers that travel on these routes over that period.The routes with increased competition are primarily Major City routes,particularly with the expansion of Rex into these routes,but also includes some regional routes.Following Rexs withdrawal from Major City rout

197、es,many of the Major City routes that did have increased competition now operate with the same number of airline groups as in 2019.Price indices calculated by BITRE have shown a fall in the real price of domestic airfares from July 2023 to July 2024.32 BITREs indices are based on the cheapest availa

198、ble fare from any airline and therefore may not represent price movements more broadly.Figure 10 shows that best discount economy airfares(measured in real terms)have remained subdued in between April and July 2024,following spikes in airfares in January and March 2024.32 BITRE collects the lowest f

199、are available for the last Thursday of the current month in each fare class.This is recorded for each route.The survey is conducted 3 weeks ahead of the hypothetical travel date.All fares are one-way except for the best discount fare which is a return fare based on a return travel date 2 weeks after

200、 the departure date.22ACCC|Domestic airline competition in Australia|August 2024 reportFigure 10:Real price index of the best discount economy airfares June 2019 to July 2024Best discount Best discount(13 month moving average)020406080100120Index(Jul03=100)Jun19Aug19Oct19Dec19Feb20Apr20Jun20Aug20Oct

201、20Dec20Feb21Apr21Jun21Aug21Oct21Dec21Feb22Apr22Jun22Aug22Oct22Dec22Feb23Apr23Jun23Aug23Oct23Dec23Feb24Apr24Jun24Jul24Source:BITRE Domestic Air Fares(Best Discount)index(cheapest available economy airfares).The price index is weighted across the 70 busiest domestic routes.Note:Grey bars indicate Dece

202、mber and Easter holiday periods.Airfares recorded between April 2021February 2022 may be impacted by the governments half-price ticket program(TANS).Discounted airfares are typically at their highest during school holiday periods,particularly during Christmas and Easter,and lowest in winter months.I

203、n July 2024 the best discount economy airfares were 9%lower than in July 2023.By route,price changes in discounted airfares between July 2023 and July 2024 were mixed.Of the Major City routes,real prices fell on Adelaide Brisbane by 32%to$262 and on Adelaide Melbourne by 31%to$151.The most significa

204、nt price declines were on Darwin Perth(-60%to$524)and Adelaide Darwin(-58%to$372).These routes were affected by price spikes in July of previous years but not in 2024.With Rexs short-lived entry onto Melbourne Perth in late June,discounted airfares were available at$398 for flights in late-July 2024

205、,down 25%from July 2023.Rex also offered$99 sale fares Melbourne Perth one-way.33 This was beaten by Virgin Australia within an hour of Rexs sale going live.34The highest percentage increase in discounted airfares in the 12 months to July 2024 occurred on Melbourne Gold Coast,up 38%to$252.On other r

206、outes Bonza exited,over the 12-month period,discount airfares were:up 19%to$330 on Sunshine Coast Melbourne up 17%to$256 on Avalon Gold Coastup 8%to$398 on Melbourne Mildura.Discounted airfares also increased on the busiest route,Melbourne Sydney,up 21%to$183.Bonza did not offer services on this rou

207、te.BITRE also calculates price indices for business and restricted economy airfares,which are derived from the lowest available fare observed by BITRE.In contrast to the trend in discount fares,between July 2023 and July 2024 the price index for business airfares increased by 9.2%to 62.2,the highest

208、 33 Rex,Rex entices travellers west with snap$99 fare sale,media release,20 June 2024,accessed 7 August 2024.34 R Ironside,Former Rex Chairman moves to reclaim position from directors who voted him out,The Australian,12 July 2024,accessed 25 July 2024.23ACCC|Domestic airline competition in Australia

209、|August 2024 reportlevel since September 2022.Restricted economy airfares remained relatively stable,increasing by 0.7%between July 2023 and July 2024.5.2 JetfuelpricescontinuetotrenddownwardsJet fuel is a significant contributor to an airlines operating costs.It will typically account for between 1

210、5%and 25%of an airlines operating costs,but this can vary depending on factors such as the price of jet fuel,the type of aircraft and the route.Some airlines will shield themselves from the volatility of jet fuel prices through hedging,which is essentially buying an amount of fuel at a fixed price f

211、or later delivery.Figure 11 shows the jet fuel prices in real terms between June 2022 and June 2024.In real terms,jet fuel was A$151.2 per barrel in June 2024,a 44.2%decrease from the high price recorded in June 2022(A$270.9),but still 3.4%higher than in June 2023.Figure 11:Real jet fuel and Brent c

212、rude oil prices June 2022 to June 2024$A per barrelJet fuelBrent crude oil050100150200250300Jun22Jul22Aug22Sep22Oct22Nov22Dec22Jan23Feb23Mar23Apr23May23Jun23Jul23Aug23Sep23Oct23Nov23Dec23Jan24Feb24Mar24Apr24May24Jun24Source:ACCC calculations using ABS,RBA and US Energy Information Administration dat

213、a.Note:US Gulf Coast Jet Fuel prices converted into current Australian dollar terms.The price an airline pays for jet fuel will also vary depending on the ports to which its aircraft operate and the respective region-specific jet fuel benchmarks.The latest month of data is to June 2024.Brent crude o

214、il was A$123.7 per barrel in June 2024.This represented a 35.6%decrease from the high price recorded in June 2022($192.2),but a 6.8%increase from last year.24ACCC|Domestic airline competition in Australia|August 2024 report6.AircraftfleetmanagementinAustraliaFleet management is a critical part of an

215、 airlines operations.It requires careful consideration of what aircraft to acquire,how many,and when.These decisions can have long lasting impacts on an airlines ability to meet customer expectations in terms of network reach,frequency of flights,airfares,passenger comfort,service reliability and en

216、vironmental concerns.The high cost of acquiring,operating and maintaining aircraft also means these decisions need to be optimised if the airline is to be competitive and financially sustainable.Over the past few years,airlines have been affected by persistent global supply chain issues in the aircr

217、aft sector,following disruptions caused by the COVID-19 pandemic.These disruptions stemmed from labour force shortages for both building and maintenance of aircraft,as well as delays in delivery times for spare parts,resulting in longer than expected wait times and higher prices being paid for aircr

218、aft.These issues have in turn impacted airlines capacity planning and flight scheduling,as well as the financial sustainability of their operations and ability to compete.New and smaller airlines can face additional challenges.Firstly,relative to incumbent airlines,if existing aircraft are unavailab

219、le due to repair or maintenance,then these airlines are less likely to have fleet available to support their operations.They may also have reduced ability to access capital which can make it challenging to secure finance for fleet.This chapter provides an overview of the key characteristics of aircr

220、aft fleet in the domestic passenger market and how this has evolved over time.It also discusses some key fleet management issues and how this can affect the competitiveness of the domestic airline industry.6.1 AirlinesrelyondifferentaircrafttypestoservicetheirnetworkAirlines rely on a range of diffe

221、rent aircraft to service the Australian domestic air passenger market.The choice of aircraft for a particular route can significantly affect the operational performance of the airline and its competitiveness in the market.Factors airlines need to consider include:expected demand and capacity on that

222、 route,accounting for factors such as seasonality and distancethe airlines expected demand and capacity across the broader domestic network(and internationally where applicable)andthe airlines fleet management strategy,including in relation to future fleet renewal and planned maintenance.The aircraf

223、t that predominantly service the industry can be broken down into 3 categories:wide-body,large narrow-body and small narrow-body(see Figure 12).25ACCC|Domestic airline competition in Australia|August 2024 reportFigure 12:Passenger aircraft body typesLARGE NARROW-BODYRange 5,0006,500 kmSeats 151+Sing

224、le-aisle Cabin width 34 mAirbus A320Airbus A321Boeing 737800Boeing 737 MAX-8Boeing 737 MAX-10WIDE-BODYRange 11,00015,000 kmSeats 230+Dual-aisle Cabin width 57 mAirbus A330Airbus A380Boeing 747400Boeing 7878Boeing 7879SMALL NARROW-BODYRange 1,0006,000 kmSeats Up to 150 Single-aisle Cabin width 24 mAi

225、rbus A220Boeing 717200De Havilland Canada Dash-8Fokker 100Embraer 190SAAB 340Source:Massachusetts Institute of Technology Global Airline Industry Program.Note:Typical seat capacity is based on general 2-class seat configuration.Wide-body aircraft are characterised by 2 passenger(dual)aisles and are

226、flown on long-haul international flights.In some circumstances,airlines have flown these aircraft on high-demand domestic routes such as Melbourne Sydney and Brisbane Sydney,but this is rare.For example,Qantas has flown the Airbus A380 which can seat up to 485 passengers.Large narrow-body aircraft b

227、y comparison are characterised by a single passenger aisle and are flown on most of Australias domestic Major City routes.They are typically favoured by airlines as they represent economies of scale in accordance with the level of demand.For example,Rex had been exclusively flying Boeing 737800s on

228、its intercity routes,which have a seating capacity of 176.Small narrow-body aircraft are also characterised by a single passenger aisle but with less seats per row and includes both small jets and turboprop aircraft.There are also some significant variations in capacity within this category.For exam

229、ple,the Airbus A220 that Qantas has recently acquired can seat just over 130 passengers,compared to the Dash 8 that QantasLink utilises on remote routes such as Cloncurry to Mount Isa,which can seat around 70 passengers.The SAAB 340 aircraft utilised by Rex on routes such as Esperance Perth seat aro

230、und 34 passengers.Small narrow-body aircraft are generally cheaper to operate and therefore suit routes with less demand,but the lack of economies of scale means the cost per passenger is normally higher.Figure 13 shows the aircraft utilised by each of the monitored airlines on domestic routes,inclu

231、ding any wet-leased aircraft,in June 2019 compared to June 2024,allowing for an observation of the key changes in each airlines aircraft fleet over 2 stable time periods.3535 The period in between was volatile as it was largely impacted by COVID-19 disruptions.26ACCC|Domestic airline competition in

232、Australia|August 2024 reportFigure 13:Aircraft fleet utilised by body type and airline,June 2019 and June 20240%20%40%60%80%100%Jun24Jun19Jun24Jun19Jun24Jun19Jun24Jun19Virgin AustraliaRexQantasJetstarShare of fleet by aircraft body typeWide-bodyLarge narrow-bodySmall narrow-body5%21%26%14%12%77%68%1

233、7%38%36%86%88%23%27%83%100%41%38%11612254542442148168Source:Civil Aviation and Safety Authority and data provided to the ACCC by Qantas,Jetstar,Virgin Australia and Rex.Note:Aircraft totals included on the right-hand side of the chart represent aircraft utilised for domestic RPT services in the refe

234、rence month,including wet-leased aircraft.Excludes aircraft in maintenance.Jetstar and Qantas have maintained a relatively similar fleet composition compared to 2019,although both airlines have increased capacity(by 13 and 30 aircraft respectively).Rex added 9 Boeing 737s(large narrow-body aircraft)

235、to its fleet to expand into major city routes since 2021,although these aircraft are now being handed back to the lessor now that Rex has withdrawn from these routes.Virgin Australia utilised an additional 6 large narrow-body aircraft on its domestic routes in June 2024 than June 2019(excluding Tige

236、rair).The wide-body aircraft that were utilised in June 2019 were no longer utilised in 2024.This reflects the fact that wide-body aircraft are rarely used for domestic flights.Fleet size can impact the ability for an airline to compete effectively.For example,airlines with a larger fleet are more l

237、ikely to achieve economies of scale in terms of acquiring the aircraft,training staff(e.g.pilots and maintenance)and providing maintenance support.There may also be more options to switch aircraft around to accommodate capacity changes due to seasonal peaks.The delays in turnaround times for fleet r

238、epairs and new aircraft due to global supply chain issues across the aircraft manufacturing sector(see section 6.3.1 for details)may leave airlines with smaller fleet without the necessary aircraft to service their scheduled flights.27ACCC|Domestic airline competition in Australia|August 2024 report

239、Aircraft fleet average age The age of a fleet can indicate whether the airline has continued to invest in the latest aircraft technology.This can improve the customer experience through modern interior design and facilities,as well as offer the airline improved reliability and fuel efficiency.In con

240、trast,an older fleet may represent poorer customer experience and higher fuel and maintenance costs.Table 1 summarises the average age of aircraft in Australia by body type,compared to the national and global average.Table 1:Aircraft average fleet age by body type,national and global averages at Jun

241、e 2024NationalGlobalWide-bodyLarge narrow-bodySmall narrow-bodyAll typesAll typesAverage fleet age13.013.324.216.811.6Source:Domestic fleet age data is calculated from the Civil Aviation and Safety Authority(CASA)database.Global fleet age data is sourced from IATA.Note:Aircraft retrieved from CASA a

242、ircraft registration on 23 July 2024,including all aircraft registered under or operated by Qantas Group,Virgin Australia and Rex.Excludes cargo aircraft.Australias fleet is relatively old compared to the rest of the world.According to the database of aircraft held by CASA,the average age of aircraf

243、t registered or operated by Jetstar,Qantas,Rex and Virgin Australia was 16.8 years.This compares to the global average of 11.6 years.366.2 AustraliasaircraftfleetisabouttogothroughatransitionWhile Table 1 indicates that Australias domestic airline fleet is relatively older than the global average,a

244、review of the airlines fleet renewal programs indicates that this is about to change.It is essential for airlines to ensure that they remain competitive by planning for investment in aircraft fleet.Fleet planning can involve adding capacity to existing aircraft and replacing ageing aircraft.Airlines

245、 need to plan for future acquisitions.Aside from the significant financial outlay of purchasing the aircraft,airlines also need to go through a range of regulatory clearances and training of pilots and crew to prepare for the operation of aircraft.From the time an airline places an order for aircraf

246、t,it typically takes several years before the aircraft are ready for flying.Global supply chain issues that have persisted since the COVID-19 pandemic have extended these timeframes further,with delays in delivery times and a shortage of trained pilots(see section 6.3 for more details).Alternatively

247、,to operate additional services sooner,airlines lease aircraft or enter partnership arrangements with other airlines.Airlines may also choose to refurbish existing aircraft cabins in lieu of upgrading its existing fleet.Airline fleet renewal programsAn airline will often source aircraft from the one

248、 manufacturer to obtain economies of scale in terms of maintenance,training costs and spare parts replacement.37 Up until recently,Qantas,Virgin Australia,and Rex,have predominantly flown Boeing aircraft on major city routes.However,this is beginning to change with Qantas and Jetstar deploying fleet

249、 renewal programs that represent a transition towards Airbus aircraft.36 IATA,Balancing fleet age for efficiency and sustainable growth,IATA,8 September 2023,accessed 2 July 2024.37 A Nowakowski,Op-Ed:Flying Single vs.Diverse Aircraft Types,Airways,10 September 2023,accessed 18 July 2024.28ACCC|Dome

250、stic airline competition in Australia|August 2024 reportThere has been greater disparity in the aircraft deployed for regional and remote routes,with Qantas deploying Airbus,Boeing,Fokker,de Havilland and Embraer aircraft,while Rex has flown SAABs for its regional and remote routes.QantasQantas anno

251、unced its current fleet renewal program in mid-2022.38 The program is expected to accommodate growth for at least the next decade with the first tranche of aircraft,the Airbus A220,that were announced as part of this program operating on flights in the first half of 2024.39In early 2024,Qantas annou

252、nced that it had ordered 29 A220s which will gradually replace its fleet of Boeing 717s.Qantas A220s have a 2-class seat configuration of 137 seats compared to Boeing 717s which had up to 125 seats.Qantas commenced services on its first 2 A220s in March 2024,with the third A220 delivered in August.4

253、0 These aircraft have been used to fly passengers on its Canberra Melbourne,Brisbane Melbourne and Hobart Melbourne services.A further 5 aircraft are scheduled for delivery by mid-2025.According to Qantas,the A220 aircraft has up to 25%better fuel efficiency on a per seat basis on like for like rout

254、es compared to its existing fleet of Boeing 717s that the new aircraft will replace.41In late June 2024 Qantas also announced plans to replace its regional turboprop fleet,acquiring 14 additional De Havilland Dash 8-400(Q400)aircraft which has 74 seats.This will replace smaller aircraft from its exi

255、sting regional turboprop fleet and bring the total Q400 fleet to 45.42JetstarJetstar has made some fleet upgrades to its domestic and international network with its 13th Airbus A321LR(NEO)aircraft(232 seats)expected by the middle of 2024,and 38 A321 NEOs due to arrive by 2029.The A321LR aircraft wer

256、e initially deployed on domestic routes such as Melbourne Cairns and Melbourne Gold Coast but have also been used on international routes.The A321XLR aircraft has a longer range than the A321LR and are intended to expand Jetstars domestic and international network.43Jetstar has also ordered an initi

257、al 12 A320 NEOs to replace its existing A320 CEO fleet,the first 5 of which are expected to arrive in 202425.44 The airline is also refreshing its 787-8 Dreamliner fleet starting in 202526,which will enable long-haul international travel.45RexPrior to the news that Rex had entered voluntary administ

258、ration,it had hoped to reinstate aircraft throughout 202425.Due to ongoing delays in acquiring spare parts for maintenance as well as pilot shortages,the number of available turboprop aircraft fleet has reduced since 2019.Rex has also faced constraints with utilising its Boeing-737 fleet which has r

259、esulted in the need to look at alternative short-term solutions.Last month,it utilised the Embraer 190 aircraft from National Jet Express,its charter services arm,to provide services on its intercity routes.38 Qantas,Qantas announces major aircraft order to shape its future,media release,2 May 2022,

260、accessed 18 July 2024.39 Qantas,Qantaslink Airbus A220 takes flight,media release,1 March 2024,accessed 18 July 2024.40 Qantas,The third QantasLink Airbus A220 has arrived in Australia!LinkedIn post,Qantas,6 August 2024,accessed 7 August 2024.41 Qantas,Qantas Airbus A220.42 Qantas,Qantas Group inves

261、ts in regional turboprop fleet,media release,25 June 2024,accessed 18 July 2024.43 Jetstar,Delivery of Jetstars new A321neo LR aircraft will improve range and comfort,media release,December 2023.44 Qantas,FY23 Results Supplementary Presentation,24 August 2023,accessed 30 July 2024,p 17.45 J Nelson,J

262、etstar adds its 12th and 13th A321neos,Australian Aviation,11 June 2024,accessed 18 July 2024.29ACCC|Domestic airline competition in Australia|August 2024 reportVirgin AustraliaVirgin Australia has had 7 737 MAX-8 aircraft in operation,with 7 additional 737 MAX-8 aircraft to join their fleet.Virgin

263、Australia expects one additional MAX-8 to be delivered this year,with the remaining to be delivered in 2025.These timeframes have been extended due to production delays.Following news that Rex had grounded its Boeing 737 fleet,Virgin Australia moved to secure leases for 3 of the jets on the same day

264、.This is likely to offset some of the capacity constraints experienced by Virgin Australia due to delays in receiving its 737 MAX-8 aircraft in the tight global aircraft market.46In addition,Virgin Australia has an order for up to 25 Boeing 737 Max-10s that were due to begin arriving in 2025.Due to

265、the broader delays and operational issues faced by Boeing,the airline has pushed back its delivery timeframe to 202526.47Virgin Australia has also placed orders for 8 Embraer E190-E2 aircraft to accommodate future services on regional routes serviced by VARA,particularly in Western Australia.The fir

266、st E190-E2 is expected to be in operation by October 2025 and will replace Virgin Australias remaining Fokker turboprop aircraft.486.3 Pandemic-inducedsupplychainissuescontinuetoimpactonairlinecompetitivenessAs noted above,airlines face a range of challenges that are not necessarily within their con

267、trol when planning for,acquiring,and maintaining their fleet.These challenges can impact on airlines plans to add capacity to the network and their overall competitiveness in the sector.In recent years,the sector has faced persistent supply chain issues since the COVID-19 pandemic.While aircraft wer

268、e readily available in 2020,the strong global recovery in aviation,labour force shortages and manufacturing issues have made aircraft difficult to acquire since.Airlines can respond to these challenges by looking at alternative ways to source aircraft,such as through leasing arrangements.While these

269、 challenges have impacted all airlines across the sector at a global level,smaller airlines face additional challenges due to potential diseconomies of scale,resulting in the need to make more difficult decisions such as reducing the routes serviced,or looking to partnerships to expand their fleet,a

270、s Rex has done with National Jet Express(see section 6.2).Supply chain bottlenecksGlobal supply chain issues continue to affect airlines operations and have resulted in significant delays in receiving new aircraft.This has limited airlines ability to offer more seats and led to an overreliance on ol

271、d aircraft.In a recent report,Bain&Company noted that limited capacity for aircraft engine maintenance,repair and overhaul has become a choke point for civil aviation and could constrain air travel growth.The increasing delays are largely due to a surge in post-pandemic engine shop visits and new-ge

272、neration engines requiring repairs in much greater numbers than anticipated.46 K Ainsworth,Rex Airlines staff told company unable to pay wages or redundancy packages as 350 workers immediately stood down,ABC News,31 July 2024,accessed 13 August 2024.47 A de Krester,Virgin set to ditech troubled max

273、10s for smaller Boeing plane,Australian Financial Review,24 March 2024,accessed 18 July 2024.48 Virgin Australia Virgin Australia Group secures new aircraft for WA regional business,media release,13 August 2024,accessed 13 August 2024.30ACCC|Domestic airline competition in Australia|August 2024 repo

274、rtLong maintenance intervals,particularly for narrow-body aircraft engines,pose a threat to the post-pandemic recovery of the airline industry.Compared to pre-pandemic levels in 2019,engine shop turnaround times in Q1 2024 were up 35%and more than 150%for legacy engines and new-generation engines,re

275、spectively.49 Bain&Companys aerospace and defence co-lead,JimHarris,noted that unless maintenance and repair organisations act quickly to close this capacity gap,airlines will face higher costs to operate constrained fleets.50 Bain&Company also said that aircraft manufacturers demand for new parts h

276、as outstripped supply by 10%to 20%,which has reduced the availability of spare parts.51 Aircraft manufacturers have said that they have encountered quality and staff shortages in recent years as they continue to build production following the pandemic.52Aircraft financingAirlines can choose to eithe

277、r own or lease aircraft.Owning an aircraft has a significant cost up-front but can be relatively more cost-effective in the long run.On the other hand,leasing an aircraft can require less financing up front and provides flexibility for a faster expansion or contraction of services.In recent years,a

278、majority(60%)of global commercial fleet were leased.Asia Pacific fleet has the second highest proportion of leased aircraft at 70%,after Latin Americas 74%,while North America has the lowest at 40%.53 Australia is leading in fleet ownership with only 17%of commercial aircraft being leased as of May

279、2024.54Airlines can lease aircraft under a wet lease or dry lease agreement.For a wet lease,maintenance,insurance and the crew required to operate the aircraft are provided under the agreement,whilst a dry lease involves exclusively leasing the aircraft only.Wet lease agreementscan be usedto quickly

280、meet demand fluctuations.Acquiring a fully operational aircraft can provide the opportunity to take advantage of peak periods.They can then be returned during quieter periods to avoid unnecessary service costs.In the case where the features of a particular aircraft type may not be appropriate,such a

281、s size and range,a lease could be used to source an aircraft that would improve efficiency.Despite offering additional flexibility,lease agreements are typically short-term solutions to fleet management.The short-term nature of aircraft leases means that airlines cannot heavily rely on them to maint

282、ain a stable fleet over the long-term.Smaller and emerging airlines can find it difficult to secure or maintain financing to buy or lease additional aircraft.This can impact on their ability to increase capacity and become a greater competitive threat to the incumbent airlines.49 Bain&Company,Get a

283、Step Ahead of the Engine Maintenance Capacity Crunch,17 July 2024,accessed 24 July 2024,p 1.50 R Ironside,Airport figures show travel still behind 2019 levels as report warns fleet constraints are worsening,The Australian,24 July 2024,accessed 26 July 2024.51 Bain&Company,Get a Step Ahead of the Eng

284、ine Maintenance Capacity Crunch,p 4.52 V Insinna et al,How production pressures plunged Boeing into yet another crisis,Reuters,9 February 2024,accessed 1 August 2024.53 IATA,More aircraft are leased than owned by airlines globally,12 April 2024,accessed 4 July 2024.54 Based on aircraft used by airlines for Regular Public Transport(RPT)in June24.Data provided to ACCC from Jetstar,Qantas,Rex and Virgin Australia;and aircraft registration data from CASA.