Australians looking for cheap flights are already benefiting from Rex's entry into the domestic market, after Jetstar and Virgin cut prices in response.
The Australian Competition and Consumer Commission on Wednesday found Rex flights, which began this month, benefited customers of other airlines.
The new operator offered $49 flights on the Melbourne to Sydney route. Virgin matched the price, while Jetstar offered $29 fares.
Rex will soon fly to Adelaide, Canberra and the Gold Coast.
ACCC chair Rod Sims said the competition had been vigorous and consumers were the beneficiaries.
The airlines continued to start new routes and exit others in response to an uncertain COVID-19 environment, according to the commission.
Mr Sims said the vigorous competition could have commercial consequences for airlines.
The findings were among those in the commission's Airline Competition in Australia report.
The report also said passenger numbers in December were 41 per cent of pre-COVID numbers. However, this was better than the 13 per cent of pre-COVID numbers reported in September.
Air travel received a boost last week through the federal government's $1.2 billion national airline ticket scheme.
The government will subsidise about 800,000 flights between April and July to more than a dozen regional areas, which will cut fares by half.
Yet critics have argued some areas have been overlooked and should also be included.
Australian Associated Press
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