Virgin Australia Surpasses Qantas in Domestic Market
In a surprising twist in the Australian aviation sector, Virgin Australia has overtaken flag carrier Qantas as the dominant player in domestic air travel. Data released by the Australian Competition and Consumer Commission (ACCC) shows that by the end of 2024, Virgin Australia captured a 35% share of the domestic market compared to Qantas’ 34.6%. Although the margin was slim—a mere 0.4% advantage—this shift marks a significant change in market dynamics for the first time since the COVID-19 pandemic disrupted global travel patterns.
The ACCC report highlights that Virgin Australia’s rise is part of a broader trend, with the airline recording impressive growth during the latter part of 2024. Notably, December 2024 saw a 15.8% increase in domestic passenger numbers for Virgin Australia, a stark contrast to the 3.2% growth experienced by Qantas in the same month. This surge is largely attributed to Virgin Australia’s expansion and the strategic management of its fleet, which now numbers 199 aircraft. In addition, Qantas’ low-cost subsidiary, Jetstar, posted an 11.2% increase in passenger numbers during the year, ending 2024 with a 29% market share.
Another key performance indicator in the ACCC figures is the load factor, which reached new heights in November 2024. The average load factor for Australian domestic flights hit an impressive 90.4%, well above the annual average of 82.9%. Virgin Australia led the charge by achieving the highest load factor at 93.4%, demonstrating strong demand and efficient capacity utilization. High load factors are a critical metric in the aviation industry, reflecting the airline’s ability to maximize revenue and minimize empty seats.
The report also indicates that Virgin Australia has benefitted from market consolidation following the collapse of regional carrier Rex in mid-2024. Rex’s unsuccessful attempt to penetrate routes between Australia’s capital cities using leased Boeing 737-800s created an opportunity for Virgin Australia to capture additional market share. Although budget carrier Bonza also faltered in April 2024, its impact was minimal since it primarily operated on routes not served by either Virgin Australia or Qantas.
Service reliability remains a mixed bag in the industry. The overall cancellation rate improved to 1.8% in December 2024, which is below the long-term average cancellation rate of 2.2%. Virgin Australia again outperformed its competitors with an exceptional cancellation rate of only 0.6% in 2024. However, on-time performance across the industry still faces challenges; December 2024 saw an on-time arrival rate of 74.7%, falling short of the long-term average of 80.7%.
The robust performance by Virgin Australia has sparked renewed speculation about its future. Industry observers are now considering the possibility that the airline’s owners, Bain Capital, might relist the carrier on the Australian Stock Exchange, buoyed by the recent market success.
Additionally, the ACCC has indicated plans to approve a proposed alliance between Virgin Australia and Qatar Airways. Under this arrangement, the two carriers will introduce 28 new weekly return services connecting Doha’s Hamad International Airport (DOH) with Perth, Brisbane, Sydney, and Melbourne. Some of these services are set to be operated by Virgin Australia using leased Boeing 777-300ERs from Qatar Airways. This strategic alliance is expected to enhance connectivity and offer improved loyalty program benefits for consumers while also expanding the international footprint of both airlines.
As the domestic aviation landscape evolves, Virgin Australia’s ascendancy over Qantas signals shifting consumer preferences and an increasingly competitive market. With strong growth figures, high load factors, and promising strategic alliances on the horizon, Virgin Australia is well-positioned to build on its recent successes and reshape the future of air travel in Australia.
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