Rural and regional Australians are losing flight options as soaring oil prices and weaker demand hit regional air routes.
Speaking at a Senate inquiry into rural and regional affairs and transportation, Virgin Australia chief customer officer Andrew Cleary said rising fuel prices had made it increasingly difficult to keep certain regional routes operating profitably.
The airline revealed in October that it had cancelled routes from Uluru to Brisbane and Uluru to Melbourne.
It has also scrapped routes from Adelaide to Brisbane, Adelaide to Cairns, Adelaide to Hobart and Launceston to Perth in recent months.
Virgin Australia chief customer officer Andrew Cleary told a senate inquiry that higher airfares did not mean higher margins for the airline, with many rural and regional routes simply becoming unprofitable.
“We would have stuck it out but jet fuel just made it completely unsustainable,” he said.
“This is not a two to three-month spike in jet fuel, there are very few people in industry that think this will be a short-run impact.”
Before the war in the Middle East, jet fuel was roughly $US85 (A$122) per barrel in late February 2026.
But it subsequently soared, briefly up 140 per cent to $US225.44 ($A325) per barrel.
This increase dwarfs the last global energy shock that followed Russia’s invasion of Ukraine in early 2022.
Jet fuel peaked at about $US155 ($A223) a barrel in June of that year.
The International Air Transport Association (IATA) says jet fuel prices were about $US190.18 ($A274) a barrel over the last week.
Airlines for Australia and New Zealand chief executive Stephen Beckett told the inquiry that cost increases didn’t hit every route the same way. He said even a small rise in costs on a regional flight could hit customers much harder.
“Cost impacts do not hit routes the same. What we know is thin and marginal routes are hit first and they are usually through to regional centres,” he said.
He said the “golden triangle” – Sydney, Brisbane and Melbourne airports, among the most profitable routes in Australia – could absorb cost rises because so many passengers flew those routes.
Mr Beckett also said a combination of rising fuel due to the Middle East war, security costs and policy had all hit Australia’s regional aviation sector.
“The recent fuel shock demonstrated just how vulnerable marginal routes can be when airlines across the industry were forced to respond by suspending, reducing or withdrawing services,” he said.
Despite these domestic pressures, Mr Beckett was keen to emphasise the global challenge, with cost pressures mounting across the aviation industry worldwide.
Monopoly industry
Making things worse, major airports operated like a “monopoly”, giving them more power to set prices that are passed on to consumers, Mr Beckett said.
Earlier in the year, the ACCC warned that major airports operate without true competition, allowing them to use their market power to earn monopoly profits at the expense of airlines and passengers.
During the senate inquiry, Mr Beckett referred to this, saying that individual airports have complex commercial arrangements.
“We believe that like in other monopoly industries like in the gas industry or otherwise, we believe having a fresh set of eyes that acts independently for consumers is the best way forward,” he said.
Virgin Australia made a similar statement, highlighting the need to sit down with all stakeholders to come up fairer prices on commercial arrangements.