Regional airfares averaged 13 percent more per kilometre than city routes; short routes cost more than double
Regional Australians are paying excessive fares to travel within their own state, with regional and remote fares averaging 13 percent more per kilometre than major city routes between 2023 and 2025, while some short routes cost more than double, according to an interim report by the Productivity Commission. One family of four told the inquiry they paid 3,200 dollars for a one-hour flight from Kalgoorlie to Perth - the cost of a single return airfare to Europe. 'Many regional communities are frustrated by the high cost of flights,' Commissioner Catherine de Fontenay said, noting that previous government inquiries had lacked the data to understand what really sets the prices. The report, commissioned by the federal treasurer, comes as airlines continue to scrap regional routes, citing high fuel costs and weak demand.
Huge costs tearing families apart
The report received more than 100 submissions, some revealing devastating consequences: the Northern Territory's Yalu Aboriginal Corporation warned that expensive airfares leave children in care disconnected from their families, with effects lasting well into their adult years; Regional Development Australia Mid North Coast in New South Wales said last-minute fares can prevent parents in custody disputes from attending court hearings, mediation and supervised visits, potentially leading to adverse legal actions including removal of children from family care; and one remote resident said a patient transport scheme did not cover flights for their daughter's critical medical appointments, so 'I just haven't taken her'. Even with a state government scheme capping regional fares in Western Australia, a return flight to Perth can still cost about 600 dollars, one resident said.
Limited competition, high operating costs
More than 90 per cent of regional and remote passengers flew with the Qantas Group or Virgin Australia in 2025, while 72 per cent of routes were served by just one carrier. Regional flights cost more to operate, with airlines spending about 91 cents of every dollar earned on fuel, maintenance and airport fees; half of regional and remote routes operate ten or fewer flights a week and more than a third of their seats are empty, Commissioner Martin Stokie said, adding that operators often choose between charging higher fares or running at a loss. Profitability varies: mining routes are more profitable while some short remote routes earn margins below 5 per cent. Regional airline Rex went into administration in 2024 after losing about one million dollars a week following an expansion into capital city routes. Last month, Qantas and Virgin executives defended regional service cuts at a Senate inquiry; Qantas Domestic chief executive Markus Svensson said that on a typical 197 dollar fare, around 93 dollars was made up of government, airport and security fees before the airline paid for aircraft, crew, fuel or maintenance.
In its recommendations, the commission said governments should do more to help patients with the up-front costs of medical travel and subsidise essential routes where airlines cannot provide a commercial service. 'Government assistance should focus on keeping communities connected, rather than supporting particular airlines,' Commissioner de Fontenay said - a call to stop propping up individual airlines and instead open subsidised routes to tender. The commission is seeking further submissions and registrations for public hearings, and will deliver its final report in April 2027. Route changes this year include QantasLink suspending Adelaide-Mount Gambier and Coffs Harbour-Melbourne, Qantas indefinitely suspending Alice Springs-Melbourne, Jetstar cancelling Brisbane-Mackay and Virgin Australia indefinitely suspending Brisbane-Alice Springs.
Other 2026 changes listed in the report include Virgin Australia indefinitely suspending Adelaide-Cairns, Brisbane-Uluru and Melbourne-Uluru; Link Airways suspending Shellharbour-Brisbane and Shellharbour-Melbourne; and Rex cancelling Melbourne-Devonport and King Island-Burnie while indefinitely suspending Sydney-Orange and Sydney-Port Macquarie. The commission also recommends a system-wide approach to airport infrastructure funding rather than case-by-case support, and transparent assistance criteria targeted to communities and essential travel.