The Australian Competition and Consumer Commission (ACCC) is closely monitoring the domestic airline industry in light of the recent conflict in the Middle East. This situation has led to significant disruptions in international air travel, particularly affecting routes to Europe, with airspace closures, flight cancellations, and diversions.

ACCC Commissioner Anna Brakey highlighted that the Middle East is crucial for global aviation, and the ongoing conflict could have ripple effects on the Australian market. The commission is assessing whether consumers are entitled to refunds for disrupted flights, noting that the applicability of consumer guarantees under Australian law may depend on the circumstances surrounding each booking.

While immediate impacts have been felt in international services, the ACCC is also observing rising global jet fuel prices, which could lead to increased domestic airfares if sustained. Airlines typically hedge fuel costs, but prolonged high prices may affect operational costs and pricing strategies.

Despite the challenges, the report indicates an overall improvement in domestic service reliability, with varying cancellation rates among airlines. The industry’s on-time performance improved, although it remains below long-term averages. Airlines like Rex and Virgin Australia reported lower cancellation rates compared to others like Jetstar, which faced significant performance issues.

Capacity growth in the domestic market has outpaced passenger demand for six consecutive months, with airlines increasing seat availability. However, total capacity is still below pre-COVID levels. Average airfare prices have decreased recently but remain higher than the previous year.

The Qantas Group and Virgin Australia reported strong financial results, indicating resilience in the domestic aviation market. However, the dominance of these two airlines raises concerns about competition and consumer choice, as they service nearly all domestic flights.

In response to these developments, the ACCC has been directed to monitor domestic air passenger transport for three years, collecting data from major airlines to ensure compliance with competition and consumer laws.