(Feb 18): Virgin Australia overtook Qantas Airways Ltd to become Australia’s largest and most reliable airline at the end of last year, sending a warning to the marquee carrier and supporting a potential return to the stock market.

Bain Capital-owned Virgin Australia garnered a domestic market share of 35% as of December, surpassing Qantas’ 34.6%, the competition watchdog said in a report Tuesday. It’s the first time Qantas has been pushed from the top spot since early 2022. Jetstar, the low-cost airline brand owned by Qantas, had 29% of the market.

According to the Australian Competition and Consumer Commission, Virgin picked up passengers after the collapse of regional carrier Rex in mid-2024, following an ill-fated expansion into capital city routes. Virgin had the busiest December, typically a time of strong leisure demand in Australia, in the airline’s 24-year history, the regulator said.

Bain postponed plans for an initial public offering of Virgin Australia in 2023, and is yet to announce a replacement for outgoing chief executive officer Jayne Hrdlicka. The airline has long struggled to make a dent in Qantas’s domestic dominance. Tuesday’s report also sends a warning to Qantas, attempting to reestablish its reputation as a marquee carrier after a torrid post-Covid period defined by lost luggage and cancelled services.

Virgin scrapped just 0.6% of its flights in December, while Qantas cancelled 2.7%, the highest proportion among the airlines tracked by the watchdog. The long-term average flight cancellation rate in Australia is 2.2%.

Separately, the ACCC said it plans to approve a proposed alliance between Virgin and Qatar Airways, which will see 28 new weekly return services between Doha and Perth, Brisbane, Sydney and Melbourne.

Qatar Airways has agreed to buy 25% of Virgin Australia.

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