Competition in aviation is important to its survival. In the last year, the aviation sector was decimated by the pandemic, a lot of airlines went down and fortunately, some managed to survive. But we’re still not out of the woods yet, the situation is far from over and the industry is still struggling to keep afloat.
In Australia, the first victim was Tiger Air. As a result of Virgin Australia’s demise, the low-coast airline was discontinued in August 2020. Virgin itself was in serious trouble and went into administration. The prospect of losing Virgin Australia brought a serious question, what will happen to competition in Australia?
Before 2020
Over the years, Australia was well served in terms of domestic competition. Jetstar and Virgin Australia were the major operators. Tiger Air was bought by Virgin Australia and it was its low-cost subsidiary. Then we had Rex a small airline operating flights to regional areas. It seemed to be a very healthy sector with some competition.
Virgin Australia goes into administration
The pandemic hit and borders were shut. An airline’s worst nightmare. Virgin Australia, which was already struggling with debt went into administration. Its first victim was Tiger Air that was shut in August 2020. A long process then started to salvage Virgin and bring it back to life.
Qantas monopoly
If Virgin could not be revived, it would mean that Qantas and its low-cost subsidiary Jetstar would have a monopoly in the Australian domestic market. Authorities started looking at this fact, as it wouldn’t be positive for the industry and the Australian consumer. The company could control the market and prices would skyrocket.
Rise of Rex
If the pandemic was cruel for some, others seemed to be able to navigate through it and even flourish. This was the case with Rex. Faced with the prospect of Virgin disappearing the company started to venture into the market and offering more flights and destinations. It started operating major routes between major cities, bought new Boeing 737’s and has been expanding ever since.
Competition restored
In the end, Virgin Australia was bought by the American Bain Capital. It is set to start this year. This is good news for Australian domestic aviation, as it will keep the competition going. The expansion of Rex and the return of Virgin means that Qantas/Jetstar won’t be alone and they will have to fight for their place in the market. More competition is also good to keep them accountable.
For the consumer, this is great too. Especially the rise of Rex. The larger companies will always do their best to get the bigger chunk of the market and when a smaller one comes to play they have to fight harder and that means, better prices and better services to entice us. More importantly, the more airlines we have, the more jobs will be created, so I think it’s a win for everyone.