Key Takeaways:
- Domestic air fares in Australia have surged, rising faster than inflation in October, due to the dominance of Qantas and Virgin in the market.
- The Australian Competition and Consumer Commission (ACCC) has found that Qantas and Virgin reaped the rewards of a busy sport finals season, with 5.5 million domestic passengers in late September and October.
- The Reserve Bank of Australia is expected to keep the cash rate at 3.6% in its final meeting of the year, with economists predicting no rate cuts in 2026.
- The Australian government’s ban on social media for under-16s is set to come into effect, with Reddit considering a legal challenge to the legislation.
- The Aukus submarine deal between Australia, the US, and the UK is progressing, with a high-level meeting in Washington confirming it is "full steam ahead".
Introduction to Domestic Air Fares
Domestic air fares in Australia have risen faster than inflation in October, with the consumer watchdog attributing this to the dominance of Qantas and Virgin in the market. The Australian Competition and Consumer Commission (ACCC) has found that the two airlines reaped the rewards of a busy sport finals season, with 5.5 million domestic passengers in late September and October. This surge in demand led to a significant increase in air fares, with prices reaching their highest level in three years, accounting for inflation.
The ACCC Report
The ACCC report highlighted that Qantas and Virgin added 45 extra flights to meet the demand, but services were more full than normal, with 84.4% of seats taken compared to an average of 81.6% over the last year. The report also noted that if another airline could match the two majors, prices might fall, but there is little competition and therefore less incentive for Qantas or Virgin to reduce ticket prices. Virgin accounted for one-third of all domestic flights in October, while Qantas, including Jetstar, accounted for nearly two-thirds, with other companies battling for the remaining 2% of passengers.
Reserve Bank of Australia’s Decision
The Reserve Bank of Australia is expected to keep the cash rate at 3.6% in its final meeting of the year, with economists predicting no rate cuts in 2026. The decision is expected to be announced at 2:30 pm, with the RBA governor, Michele Bullock, giving her final press conference of the year an hour later. Financial markets are now putting a roughly 50% chance on a hike by May, and have fully priced in a move higher by August, according to ANZ.
Social Media Ban for Under-16s
The Australian government’s ban on social media for under-16s is set to come into effect, with Reddit considering a legal challenge to the legislation. The ban, which will require TikTok, Snapchat, Instagram, Facebook, and others to remove children from their services, begins on December 10. Prime Minister Anthony Albanese has written to all state and territory premiers and chief ministers, thanking them for their support for the change. Reddit has expressed "deep concerns" about the ban, claiming it is "legally erroneous" and goes beyond the original intent of the Australian Parliament.
Aukus Submarine Deal
The Aukus submarine deal between Australia, the US, and the UK is progressing, with a high-level meeting in Washington confirming it is "full steam ahead". The meeting between US Secretary of State Marco Rubio, Defense Secretary Pete Hegseth, Australian Foreign Affairs Minister Penny Wong, and Defense Minister Richard Marles discussed the alliance between the two countries and the importance of the Aukus deal. Australia is due to give the US $1 billion to kickstart production of nuclear-powered submarines for Australia.
Other News
In other news, Nationals defector Barnaby Joyce has joined One Nation, citing the party’s growing popularity as part of a global right-wing swing. Joyce has agreed with statements made by One Nation leader Pauline Hanson, including her comments on the rise of the Reform Party in the UK under Nigel Farage. The NSW Rural Fire Service has downgraded the advice level for a large bushfire in Bulahdelah, with conditions easing across the fireground and firefighters getting the blaze under control. The Bureau of Meteorology has confirmed that there is no threat to Australia from a powerful earthquake that struck off the coast of Japan overnight.