The Albanese authorities should absolutely realise that one thing should be executed within the Australian aviation sector, the place Qantas and Virgin are the nation’s strongest duopoly. Regardless of the motion, it should transcend merely propping up a distant third competitor, with relative spare change, on the taxpayers’ expense.
In its newest report into the aviation sector, the Australian Competitors and Shopper Fee (ACCC) revealed to the shock of exactly no-one that, from July to September, buyer charges had been hiked by a mean of 13%, with some rising as excessive as 95%.
“In comparison with 12 months prior, home fares have remained at related ranges. Whereas common income per passenger was barely greater in nominal phrases (+2.6%) in September 2024, there was no change in actual phrases (-0.2%). This has occurred regardless of jet gasoline costs, which generally contributes between 15-25% to an airline’s working prices, falling by 41% over the identical interval,” the ACCC report mentioned.
For over a decade, Qantas’ justification for jacking up airfares has been gasoline costs, regardless of the corporate’s insurance policies of hedging as much as 90% of its gasoline prices, which might ameliorate the impact of such rises. We now have struggled to search out any Qantas announcement about fare reductions when gasoline costs fall, as they’ve so dramatically prior to now 12 months.
The most costly flights within the nation may be discovered on Qantas-only regional routes. The 2-hour Sydney-Lord Howe Island flight, for example, is $1,500 minimal for per week’s spherical journey on February 6 subsequent 12 months. That’s greater than the $1,369 for Sydney-Paris on Turkish Airways on the identical time. The two.5-hour journey from Brisbane to Mt Isa return on the identical dates is $778 minimal, whereas Brisbane to Bali on Batik Air is $472.
However maybe essentially the most telling statistic is that the ACCC estimates Qantas and Virgin now have 98% of the home market, with Qantas Group’s share being 65%. This type of dominance overshadows the grocery store duopoly of Coles and Woolworths (65%), the government-backed huge 4 in banking (70% of residents’ property), and power corporations AGL, Vitality Australia and Origin (between 50-77% of the market within the three east-coast states).
If this focus occurred in every other trade there could be a full-blown authorities inquiry. Qantas is enjoying us for mugs with its at-the-ready bulletins (typically on days when dangerous information arrives) of recent plane which can be lastly, albeit very slowly, starting to reach. The brand new planes will minimize the corporate’s per-seat gasoline price by not less than 20%, not that passengers will see it. And Qantas isn’t constructing its fleet to match Australia’s inhabitants development; it’s merely to exchange present capability. It’s a technique designed to maintain costs elevated as excessive as it could actually handle.
On the identical day the competitors regulator belled the cat on airline value gouging in Australia, the federal authorities dedicated $80 million to maintain ailing Regional Specific Airways (Rex) afloat. Provided that the market capitalisation of Rex when it ceased buying and selling on the ASX forward of liquidation in July was $63.97 million, taxpayer {dollars} would absolutely be higher spent on fairness.
This may very well be executed by the use of both a complete buyout — as prompt by my colleague Bernard Keane — or a controlling stake as a part of a program to rebuild the corporate with shareholder and administration buy-in. Regardless of the reply is with Rex, handing $80 million with no strings connected to a board at warfare with itself, simply to get the federal government previous the election with out regional journey collapsing, is definitely not the best one.
Australian taxpayers are clever to this recreation, having already seen greater than $2 billion of their hard-earned {dollars} handed to Qantas whereas in the meantime it illegally sacked employees through the pandemic. The results of this present? Tens of tens of millions of {dollars} for Qantas executives and billions for the corporate’s shareholders, who additionally embody, in fact, Qantas executives and board members. It’s good work, if you will get it.
For clear indicators of the immense energy and affect Qantas wields in Canberra, look previous the Chairman’s Lounge to the selections of hapless Transport Minister Catherine King: the knockback of Qatar’s bid to extend its flights into Australia, for instance, or the failure to introduce passenger ensures that might make Qantas assume twice about any cancellation.
Now we have now the federal government propping up Rex the place Qantas received’t fly and Qantas threatening to tug regional routes if the spectre of extra regulation looms. However the issues within the Australian aviation sector run far deeper than the egregious and roughly unchecked shopper value gouging and pathetic inaction by a conga line of governments.
If a brutal inquiry is the best reply for supermarkets and a royal fee for the banks, absolutely the aviation sector’s time has come?
Ought to there be an inquiry or perhaps a royal fee into the aviation trade? Tell us your ideas by writing to letters@crikey.com.au. Please embody your full identify to be thought-about for publication. We reserve the best to edit for size and readability.
