'Passengers pay the price': The popular Aussie flight now charging 38% more

Passengers flying between two popular Australian cities are paying almost 40 per cent more for flights since a budget airline exited the market, a new report shows.

Bonza and fellow low-cost carrier Rex Airlines injected much-needed competition into the market, and airfares have been higher on certain routes since Bonza's exodus.

After Bonza entered the Melbourne to Gold Coast route, airfares decreased by 54.4 per cent. This route has faced the highest airfare increase since the airline's exit, with prices up 38 per cent.

This is according to the Australian Competition and Consumer Commission's Domestic airline competition in Australia report, which found the average airfare paid per passenger fell by around 25 per cent when Rex entered several intercity routes in 2021.

Rex has since entered voluntary administration, and capital city routes have been grounded, with many fearing for the future of regional routes.

The competition regulator revealed the average revenue per passenger on routes with added competition had been lower compared to 2019 levels, demonstrating a drop in airfares over that period.

The Australian Airports Association highlights the need for new entrants in the domestic airline sector to drive down prices.

Head of policy and advocacy Natalie Heazlewood said more competition means lower airfares.

"The ACCC's latest report provides solid evidence to support this and when an airline exits, passengers pay the price," Ms Heazlewood said.

"Unfortunately as we've seen with Rex and Bonza, there are a number of difficult obstacles facing challengers to Australia's airline duopoly."

Ms Heazelwood called Rex's entry into Australia golden triangle - Melbourne, Sydney and Brisbane - "ambitious", and administrators also highlighted supply chain issues and pilot shortages as key factors in the airline's debt.

Incentivising and removing barriers to new entrants, addressing workforce shortages and the reforms to Sydney Airport's complex slot scheme would help new and expanding airlines, she said.

Prior to the grounding of its jet aircraft, Rex flew to 56 destinations across Australia. It commenced operations over 20 years ago as a regional service, servicing locations including Dubbo, Merimbula and Mount Gambier.

The company's collapse left many in towns such as Dubbo, Forbes, Wagga and Albury wondering about the future of the service. Tanya Forster, who runs the Macquarie Health Collective in Dubbo, feared airline closures could leave regional towns without access to specialists and the Mayor of Dubbo, Councillor Mathew Dickerson said getting regional aviation right should be a national priority.