On a wing and a prayer: rural flights up in the air

Detailed summary

Rural air passengers are paying as much as double to fly amid rising costs and slim competition but government intervention isn't the answer, analysis shows.

Australia's regional aviation sector is flying by the seat of its pants, operating on thin margins and doubling some rural fares as costs surge.

Regional airfares were 11 per cent higher per-passenger in the two years to 2025 compared to city routes and 13 per cent higher per kilometre, a Productivity Commission report has found.

Some rural and remote per kilometre fares were more than double city prices.

The commission released its interim report into regional airfares on Wednesday night, using previously withheld cost and revenue data from the nation's airlines.

"Many regional communities are frustrated by the high cost of flights," Commissioner Catherine de Fontenay said in a statement.

"Previous government inquiries have looked at the issue, but until now we haven't had the data or the evidence to understand what really sets the prices."

Regional services spread costs out across fewer passengers, leaving many routes with a profit margin of five per cent or less, the report said.

That position leaves regional aviation extremely vulnerable to cost surges, such as the rising price of jet fuel and reduced demand.

Leading costs are fuel, airport charges and crew, with a nine per cent margin on the average regional fare.

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