Introduction

The collapse of Bonza, Rex entering voluntary administration in 2024, and QantasLink’s decision to shut crew bases in Hobart, Canberra and Mildura have all underscored the current challenges of regional airlines.

These events are not isolated commercial failures, rather they highlight some of the structural challenges of affordability, reliability and the financial viability of Australia’s regional aviation sector.

Regional aviation isn’t a discretionary service. It’s often the most efficient way some locations are connected to healthcare, education, business and emergency services. Regional hospitals, court houses and universities all depend on specialised professionals being able to fly in and out through a regional airport. The Australian Airports Association estimates regional airports facilitate over 6000 emergency medical evacuations each year and house over 500 firefighting aircraft across Australia.

Key Facts and Figures

• The average ticket price per kilometre is 52 per cent higher on flights involving regional airports compared with flights between two capital cities.
• Regional routes have fallen from 458 in 1989 to 291 in 2021.
• Around 60 per cent of regional airports operate at a loss.
• Nearly 40 per cent of regional airports expect ongoing deficits, driven by ageing infrastructure, security requirements and regulatory costs.

Policy Landscape

Productivity Commission Review

Following the release of the Aviation White Paper – Towards 2050 in August 2024, which found that regional Australians are dealing with high airfares, drastically fewer routes and dwindling flying schedules, the Albanese Government asked the Productivity Commission to undertake a review into the determinants of regional airfares.

Announcing the Terms of Reference, Treasurer Jim Chalmers and Minister for Transport, Catherine King, declared: “… regional Australians deserve reliable air services at reasonable prices and that’s what this review is about”.

The Terms of Reference ask the Commission to examine issues including:

• Competition and barriers to entry on regional routes
• Airport fees and charges
• Pricing practices across the aviation supply chain
• The role of government intervention in improving affordability and reliability

The Productivity Commission has been directed to run public hearings and invite submissions (open until 15 March 2026), with a final report due in 2027.

“This will give state governments and the Commonwealth the nationally consistent data required to tackle the issue of regional airfares.” – Treasurer Dr Jim Chalmers MP

Senate Committee Inquiry

Running alongside the Productivity Commission review is a Senate Committee Inquiry into the aviation sector’s ability to deliver reliable and affordable services to rural, regional and remote communities.

This Inquiry moves beyond fares and into issues like service continuity, workforce/location decisions, airport viability and consumer impacts.

The Inquiry was instigated by Tasmanian Senator Jacqui Lambie in late October 2025. The submission window has been pushed back, and is now open until 27 February 2026.

The Inquiry is being chaired by Queensland Senator Matt Canavan, with the first hearing already held in Canberra, and a new round scheduled for Burnie in Tasmania in February.

The first hearing centred almost entirely on QantasLink’s decision to close crew bases in Hobart, Canberra and Mildura (which we go into further detail about below). Several stakeholders, including unions and regional airports, argued the closures are emblematic of deeper structural pressures in regional aviation, with community, workforce and service‑continuity risks all highlighted. The Transport Workers’ Union questioned Qantas’s justification that the closures would reduce cancellations, saying: “If there is a benefit, it will be absolutely marginal… and the increased risk to these regional communities is going to be significant”.

Challenges

1. A highly concentrated market with little competition

Australia’s aviation sector is one of the most concentrated in the developed world, with Qantas (including Jetstar) and Virgin Australia controlling 98 per cent of the domestic passenger market according to the ACCC’s 2025 figures.

Compared to some other developed countries:

• Canada’s two largest airlines control around 72 per cent of domestic travel.
• In the United States, the top four carriers control around 70 per cent of the market.

One of the ways this challenge manifests itself, which was cited multiple times during the Senate Inquiry hearing, is accusations of ‘slot hoarding’, where more established carriers are accused of using their control over take off and landing slots at airports to limit the ability of smaller airlines to establish reliable, competitive services.

Aviation data analysis by the Department of Treasury’s competition taskforce buttressed this, revealing just how much competition matters for regional passengers’ fares – when a route is only serviced by one airline, it costs travellers 39.6 cents per kilometre. Add just one competitor, and that reduce to 28.2 cents per kilometre. With three competitors, the price falls to 19.2 cents per kilometre.

2. Cost pressures on regional airports

Another key challenge for the sector is the financial viability of regional airports and their upkeep. Around 60 per cent operate at a loss, driven by ageing infrastructure, rising security and regulatory costs, and high staffing requirements.

With more than 200 regional airports owned by local Councils, these losses ultimately fall to regional ratepayers, however many are constrained by rate caps and limited revenue bases.

In 2017, an aircraft landing at Kempsey Aerodrome struck a kangaroo and then sued the Kempsey Shire Council for the damage and for not installing kangaroo proof fences. The case was overturned, with the NSW Court of Appeal noting Council’s limited resources, and Mike Carmody, the former chief of security for the Federal Airports Corporation, noted that: “It's pointless throwing these regulations and policies and requirements at regional airports knowing full well that the local council or whoever owns these ports are not within cooee of ever being able to fund this”.

3. Centralisation of airline operations and QantasLink’s decision to close staff bases

Several stakeholders have argued that QantasLink’s (Australia’s largest regional carrier) decision to close its staff bases in Hobart, Canberra and Mildura from 2026 will create even more issues for the regional aviation sector.

When a staff base closes, regional airports lose the crews who normally start and finish their day locally, meaning even minor disruptions can result in delays because replacement staff must be sourced from Sydney, Melbourne or Brisbane.

During the Senate Inquiry hearing, CEO of QantasLink, Rachel Yangoyan, said: “This decision is not about cost savings or profitability; it’s about improving reliability and setting us up for success as we embark on a significant period of fleet renewal”.

However, the Transport Workers Union called this into question at the Inquiry, claiming: “QantasLink is already performing well on on‑time arrivals and cancellations; the rationale that base closures improve reliability just doesn’t stack up”.

The CEO of Mildura Airport was asked during the hearing about what signals the base closures, and he noted that it is “a lack of regional connections, reduced local economic activity and business investment,” again underscoring how regional airports are about more than travel and how they impact these communities.

York Park Group’s Thoughts

Any public policy area with a regional angle presents unique public affairs challenges – we see this with airports, agriculture and telecommunications.

The population density of Australia results in most of our politicians being based in cities, and the nature of the departmental work sees more bureaucrats being based in metropolitan areas than in the regions.

The challenge to achieve any policy change will be to raise awareness of the issues that are unique to regions, and integrating those challenges into the broader political and policy narrative.

To do this, organisations will need to consider all elements of the public affairs landscape – active engagement with inquiries and reviews and decision makers, media, advocacy and events.

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