By Jamie Freed

SYDNEY – Australia’s national airline industry has been held back due to state border closings. New entrants are poised for a price battle as they challenge the dominant incumbents Qantas Airways Ltd. Virgin Australia.

Regional Express Holdings Ltd (Rex) is expanding on major routes while low-cost start-up Bonza https://www.reuters.com/article/australia-airlines-bonza-idCNL4N2SR03S will target thinner leisure routes that are unserved or underserved from next year.

They are offering fresh competition in the market, which is the first since Virgin acquired independent budget airline Tigerair Australia in 2013. Rex’s A$69 ($49), one-way ticket on the new Sydney-Brisbane route is a good example of lower fares that are driving others to reduce their prices.

Peter Harbison, CAPA Centre for Aviation Chairman Emeritus Peter Harbison stated that the market had never seen three major jet players for any sustained time. He spoke at a conference organized by his company. What are the losers in all of this? “The Australian traveling public.”

The domestic market has fallen to 17% from pre-COVID passengers when Sydney and Melbourne were shut down in October. However, the states have reaffirmed their commitment to opening borders even though the Omicron variant threatens to disrupt them.

According to Qantas data, the airlines want a share of Tigerair’s now-closed 7% market share in a market that has historically yielded a profit of A$1billion ($711.80m) per year.

Qantas hopes to reach pre-pandemic levels of domestic capacity in January, and exceed it by April. The airline now targets 70% market share, an increase of 62% from the previous year. Alan Joyce, Qantas chief executive said that Qantas would be “competitive to defend its turf” by offering top products and competitive fares.

Australia’s competition regulator announced Tuesday that they were closely watching pricing and capacity. But analysts fear the unorthodox trading environment might make it difficult for them to establish whether activity was anti-competitive, or part of an economic recovery plan.

Qantas states that its goal is to create cash and put idle aircraft and personnel back into the air, rather than turning immediate profits. Qantas also claims that there are natural benefits like a loyalty program and strong financial performance.

In the midst of the pandemic, it launched close to 50 new domestic routes. Jayne Hrdlicka, chief executive of Virgin Australia, said that Virgin plans to add routes such as Perth-Launceston to maintain a third market share for Tigerair. John Sharp, Rex’s Deputy Chairman (OTC) stated that his airline will add more planes to bigger cities while Tim Jordan, Bonza Chief Executive said that he believes there is a lucrative niche for an independent budget carrier since Jetstar is controlled by Qantas.

Jordan stated that Bonza’s plans are about “new growth and new opportunities”, referring to Jordan’s comments. It isn’t about taking share from anyone.”($1 = 1.4049 Australian dollars)