Business airfares rose 17 per cent June and August and Qantas, Virgin and Rex all increased their market share between April and July 2022 after winning passengers from Jetstar.

The Qantas Group-owned Jetstar carried 23 per cent of all domestic passengers in July, down from 28 per cent in April. Qantas carried 39 per cent of passengers in July, compared to 33 per cent for Virgin and 5 per cent for Rex.

In its latest report on airline competition, the ACCC said the combination of high demand for travel and reduced capacity resulted in fuller flights. In July 2022, 82 per cent of seats were filled, while many routes to northern Australia surpassed 90 per cent. With such full planes, it has often been difficult for people to find available seats when their initial flight has been cancelled.

The ACCC said after 18 months of historically low fares when travel was difficult because of pandemic restrictions, the cost of domestic travel rose “sharply” when demand returned.

As an example it said the number of passengers flying between Canberra and the Gold Coast in July doubled on a year earlier.

“Travel between the Gold Coast and each of Melbourne and Adelaide also surpassed pre-pandemic demand,” the ACCC report found.

ACCC chair Gina Cass-Gottlieb said discount airfares in August were at the highest point in almost two years.

“In these circumstances, more than ever, the level of competition between airlines is incredibly important to maintain pressure on ticket prices and service levels across the country,” she said.

The findings in the report follow the ACCC’s recent concerns over the merger of Qantas and Alliance Aviation.

“We are aware that for many consumers, long awaited travel fell well short of expectations with record delays, very high rates of cancellations, lost baggage, and long wait times for call centres. We have been engaging closely with airlines to understand the source of these problems,” Ms Cass-Gottlieb said.

Rex performed significantly better than the other airlines in terms of punctuality and the rate of cancellations. It attributed this success to keeping its staff despite reduced flying over the last two years.

The ACCC said airlines had informed it that on-time performance had improved more recently as rates of sickness have subsided, the aviation industry recruited more people, and the airlines reduced the number of scheduled flights.

“We expect that airlines will be honest and proactive in communicating to passengers the reasons why a flight is delayed or cancelled, how the consumer guarantees apply, and what other compensation they are entitled to,” Ms Cass-Gottlieb said.