News: QAN UPDATE 1-Australian competition regulator to monitor domestic air fares

(Adds details on Regional Express and Bonza in paragraphs 2 and 3, quote in paragraph 4)

Aug 22 (Reuters) - Australia's competition regulator said on Thursday it will closely monitor domestic air fares between metropolitan cities after local carrier Regional Express (REX) withdrew from the market last month as it entered voluntary administration.

Rex is the second domestic airline to take that route this year. Low-cost airline Bonza was the first. It said in April it had suspended flights, and would assess the viability of its business.

The collapse of Bonza and the withdrawal of Rex between metropolitan cities means that no domestic route had more than two competing airline groups as of July, the Australian Competition and Consumer Commission said.

"With the suspension of Rex's services... we are closely monitoring airfares and remain vigilant to any increases in prices on routes that Rex is no longer flying on," Commissioner Anna Brakey said in a statement.

The commission warned that consumers may not be able to capitalise on the benefits of a more competitive domestic market if Rex was unable to restart services soon.

Qantas (QAN) and Virgin Australia (IPO-VIR) - which dominate the country's aviation sector - did not immediately respond to Reuters' requests for a comment.