Australia’s two major airline groups, Qantas Group and Virgin Australia, have reported impressive financial performances for the first half of the 2024-25 financial year.
This has been driven by strong demand for domestic travel and limited market competition. This is according to the latest Domestic Airline Competition report by the Australian Competition and Consumer Commission (ACCC).
Qantas Group: Dominance in Domestic Skies
The Qantas Group posted earnings before interest and taxes of $1.5 billion for the first half of 2024-25, with $916 million attributed to its domestic operations, encompassing both Qantas and Jetstar.
Qantas Domestic, including QantasLink, led the group’s earnings with $647 million, fuelled by its commanding 80% share of the corporate travel market.
This reflects a resurgence in business travel demand, solidifying Qantas Group’s position as a market leader.
“Qantas and Jetstar together account for over 60% of domestic passengers, highlighting their dominance in the sector,” said ACCC Commissioner Anna Brakey. Jetstar Domestic, in particular, saw a remarkable 53.7% increase in earnings, reaching $269 million compared to the same period in 2023-24.
The low-cost carrier has capitalized on its unique position as Australia’s sole budget airline following the exit of Tigerair in 2020 and Bonza Airline’s collapse in April 2024.
“Jetstar has thrived in the absence of another low-cost competitor, boosting its market share and profitability,” Ms. Brakey noted.
Virgin Australia: Record Profits
While Virgin Australia does not release detailed half-year financials, former CEO Jayne Hrdlicka announced in February 2025 that the airline achieved record profits for the period.
This was a testament to its successful restructuring under Bain Capital post-administration. Virgin Australia has also expanded its market presence, increasing its passenger share to 34.4% in March 2025, up from 31.3% a year earlier.
The acquisition of three Boeing 737 aircraft leases from Regional Express (Rex), which withdrew from capital city routes, has allowed Virgin to enhance its seat capacity and network reliability.
Passenger Surge and Weather Challenges
The report highlights a significant uptick in passenger numbers expected for April 2025, driven by school holidays, Easter, and ANZAC Day occurring within a three-week period.
Airservices Australia reported that April 17, 2025, the Thursday before Good Friday, marked the busiest day for domestic travel in five years.
However, March 2025 saw a 4.9% decline in passenger numbers compared to March 2024, largely due to severe weather events linked to Ex-Tropical Cyclone Alfred along Australia’s east coast.
Key routes, such as Brisbane to Sydney and Brisbane to Melbourne, experienced passenger drops of 9.9% and 9%, respectively. Gold Coast and Maroochydore airports were hit hardest, with passenger declines of 30.2% and 25.1%, respectively.
The weather disruptions also led to a spike in flight cancellations, with the industry cancellation rate rising to 5% in March 2025, compared to the long-term average of 2.2%.
Despite these challenges, on-time arrival rates have shown improvement, reaching 80.2% in March 2025, just shy of the long-term industry average of 80.7%. This marks a notable recovery from 74.5% in October 2024.
“Improved on-time arrivals are a positive sign for travellers, offering greater confidence in flight schedules,” Ms. Brakey said.
Airfare Trends Reflect Seasonal Patterns
Airfares have followed seasonal trends, dropping 16.1% from October 2024 to January 2025 before rising 9.6% by March 2025. “These fluctuations align with historical patterns,” Ms. Brakey explained, noting that airfares have eased from their October 2024 peak.
Demand for domestic travel in early 2025 was lower than the previous year. Last year saw unusually high demand due to events like the Taylor Swift concerts in February 2024 and an earlier Easter weekend in March 2024.
These factors drove up airfares as demand outpaced supply.
Looking Ahead
The strong financial results of Qantas Group and Virgin Australia underscore the resilience of Australia’s aviation sector, despite challenges like weather disruptions and limited competition.
As demand for travel remains robust, particularly during peak periods, the industry continues to adapt.
However, the absence of additional low-cost carriers may keep airfares elevated, particularly during high-demand seasons.
Travelers can expect improved reliability, with on-time performance nearing pre-pandemic levels, offering a more predictable travel experience.
Buy Our Magazine!
