Market leader Qantas has hit back after damning data revealed a massive jump in airfares after its smaller rival Rex went into administration in July.

The consumer watchdog found that airfares on key domestic routes jumped 13.3 per cent after Rex went into voluntary administration.

But Qantas say British rockers Coldplay are actually the reason for the immediate spike.

Rex collapsed after its fleet of Boeing 737s operating between major metropolitan centres was grounded. Its management was handed to administrator EY Australia, while the regional carrier’s services to smaller airports continue as a buyer or financial lifeline is sought.

The Australian Competition and Consumer Commission’s latest report on domestic airline competition, released on Tuesday, found the demise of Rex on capital city routes had an almost instant effect on airfares.

“The recent spike in airfares corresponds with a less competitive domestic airline sector after Rex’s exit from 11 of the 23 services between metropolitan cities,” ACCC commissioner Anna Brakey said.

“While we also typically see a seasonal peak in air travel in September due to major sporting events and school holidays, there were additional pricing pressures this year. Passengers were no longer able to access the lower fares that Rex offered, and airline seating capacity decreased following Rex’s exit. This in turn has contributed to higher airfares.”

The watchdog found airfares jumped while inflation for the period was just 0.2 per cent.

It said fares for “best discount economy” tickets jumped between July and October for many of the routes on which Rex no longer operates.

Most notably this includes services from Adelaide to Melbourne (up 95 per cent to $296), Melbourne to the Gold Coast (up 70 per cent to $432) and Canberra to Melbourne (up 54 per cent to $298).

“The exit of Rex as a third competing airline group on services between metropolitan cities may have significant longer-term impacts on the domestic aviation sector,” Brakey said.

“The domestic airline industry has become even further concentrated, and it may be some time before a new airline emerges to compete on popular services between metropolitan cities, with normal barriers to entry and growth exacerbated by aircraft fleet supply chain issues and pilot and engineer shortages.”

Brakey said less competition meant less choice for consumers and less incentive for airlines to offer cheaper airfares and more reliable services.

Qantas airfare data.

But Qantas said the ACCC data didn’t reflect what travellers were actually paying.

“The data is from the government’s monthly fare monitoring, which expressly states that it does not measure ‘average fares paid by passengers’. It is a snapshot of the lowest fares available to purchase on a particular day three weeks prior to travel and does not factor in events which may impact demand and fares,” it said on Tuesday.

The airline said the day chosen for the latest report was October 31 – the day of a Coldplay concert in Melbourne.

“As such, demand was significantly higher on flights into Melbourne, which means lower fares were snapped up early and the fares left available to purchase three weeks out were higher than usual. The average fare increase on these routes between July and October was significantly lower,” it said.

In fact, Qantas said, airfares from July to September this year had increased broadly in line with inflation from the same period in 2023.

“These increases were occurring while Bonza and Rex were still operating on domestic routes,” the airline said.

“On routes where there are capacity reductions, there will generally be less lower fares available and we are looking at how we can add more capacity where we can.”

We’re committed to maintaining a strong regional #aviation sector! ✈️

We’ll provide @RexAirlines with a loan up to $80m to keep regional routes flying during voluntary administration + continue guaranteeing ticket sales!

Book with confidence, or get your $$ back! ✅#auspol

— Kristy McBain MP, Member for Eden Monaro (@KristyMcBain) November 12, 2024

Keeping Rex in the air

Meanwhile, the government has thrown Rex an $80 million lifeline and granted early access to entitlements for former employees.

The money will support continuing critical services for regional communities, Transport Minister Catherine King and Workplace Minister Murray Watt said in a joint statement on Tuesday.

Rex’s administrators plan to apply to the Federal Court to extend the voluntary administration to June 30, 2025.

If the application is granted, the government will continue to guarantee ticket sales made throughout the administration period to that date.

Birdsville mayor Francis Murray said there were fears for the future of the town, in remote Queensland, if its twice-weekly flight to Brisbane was grounded.

“Everything is connected back to it,” he said.

“If we were without a flight now – and with unsealed roads out here – it would put us back 50 years.

“So to get this news is a massive relief.”

Albany mayor Greg Stocks said flights connecting Western Australia’s vast regions to the city were essential.

“For regional cities around Australia it’s a lifeline,” Stocks said.

“We have people who fly to Perth for surgery, we have medical professionals who fly in because we don’t have enough of them.”

More than 600 workers were made redundant as it was revealed Rex was struggling under the weight of $500 million of debt.

In August, the federal government stepped in to guarantee bookings on regional flights, but resisted calls for a bailout.

-with AAP