28 September 2023

Government needs to deal with market bully Qantas

| Ian Bushnell
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executive speaking to media at airport

Canberra Airport chief executive Stephen Byron says Australia needs a competitive third airline. Photo: Region.

Canberra Airport boss Stephen Byron didn’t hold back in a blistering submission to the current Senate inquiry into the air travel passenger market.

The target was of course Qantas, accusing the Spirit of Australia of not acting in any sort of spirit of fair play but indulging in misleading and deceptive behaviour over flight cancellations, particularly on the Sydney-Canberra run, profiteering and crushing any whiff of competition.

Mr Byron has his own patch to protect but he was only saying what most Australians are thinking about Qantas’s record profits and sky-high airfares.

Taxpayers got Qantas through the dark days of the pandemic and the airline has repaid that faith by sacking workers illegally, ratcheting up airfares and thumbing its nose at travellers who have to cope regularly with cancelled or delayed flights, sometimes due to mechanical issues in its ageing fleet, but more often because the airline deems there aren’t enough passengers.

Then there is the $21 million golden handshake to the architect of all this, former CEO Alan Joyce.

Mr Byron said Australia’s three-airline system was a sham and offered little competition, with Qantas and its supposed low-cost subsidiary Jetstar hogging 80 per cent of the profit pool in the domestic market from 66 per cent of the passenger volume.

“Qantas and Virgin are not providing effective price competition to each other – if they were, airfares would not be exorbitantly high,” he said.

The friendly duopoly meant consumers were being shafted, and other carriers such as Rex or Bonza were insignificant.

“In the 2022/23 financial year, Qantas Domestic achieved an operating margin of 18.2 per cent – Qantas has previously told investors that the normal industry margin is 8 to 10 per cent,” Mr Byron told the committee.

He called for the competition watchdog to resume monitoring the industry and for greater consumer rights for passengers. including refunds for cancelled flights.

“There is no greater industry demanding of such scrutiny through its intense concentration and there is no more important time for it to be in force given the current behaviour,” Mr Byron said.

But he also said Qantas should be forced to hive off Jetstar so its errant child could be a truly independent carrier and offer real competition.

Any competitive third airline must have at least 15 per cent of the market to be effective and to have the critical mass to compete against Qantas, Jetstar and Virgin, as well as 15 per cent of the crucial domestic slots into and out of Sydney Airport being available to it.

Mr Byron said this could be done through legislation or leverage, given the aforementioned taxpayer subsidy and the protection given from overseas carriers such as Qatar Airways wanting to fly domestic routes.

“The status quo is not an acceptable outcome,” he told the committee. “There needs to be significant change and this will not happen without a significant intervention by government.

“Qantas has demonstrated that unless they are forced by a regulator or the highest court in the land, they will do what they please. Airfares have not gone down since the Qantas CEO departed and nothing has changed.”

But it’s not just about fewer people being able to afford to fly or consumer rights, Qantas’s ruthless pursuit of profits is trashing a brand built on being the safest and most reliable airline in the world.

Carriers have come and gone in bids to make the Australian market more competitive but the nation’s population these days, especially on the eastern seaboard, should be enough to support three independent major airlines.

Mr Byron is right, though. Government intervention is required to not just protect consumers but establish an environment in which air travel can be accessible and reliable.

Original Article published by Ian Bushnell on Riotact.

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