Australian carrier Qantas Airways has misused its top position in the country’s aviation sector to charge exorbitant ticket prices, according to the former head of the Australian Competition and Consumer Commission (ACCC). Allan Fels said in his report that was released Wednesday (7 February) that the country’s biggest airline was price gouging consumers and said in late 2022, the airline’s fare increases were so large that a quarter of the country’s inflation was mainly caused by the airline.
Download the full report here.
The government should remove “unnecessary restrictions on competition on international and domestic aviation”, Fels said in his report, which was commissioned by the Australian Council of Trade Unions. He said the government’s decision last year to block more Qatar Airways flights into Australia was “clearly” in the interests of Qantas. The findings add further fuel to the arguments that Qantas is no longer the “national carrier” because of a string of missteps that have hurt the airline’s brand.
Qantas’ service delivery returning from the pandemic shut down became so derided the term ‘Joyced’ (referring to former CEO Alan Joyce) entered into popular Australian usage to ‘describe being severely inconvenienced at an airport by flight cancellations or luggage going astray’, Fels said in his report. Internal documents published by the Australian Financial Review showed that the percentage of consumers who said they trusted Qantas had fallen from 70 percent in August to just 49 percent, the report added.
Despite the damage to its reputation, during 2022 Qantas reduced capacity on its domestic services. In June 2022 it announced to the ASX that it was “adjusting its domestic capacity levels for much of FY23 to assist with the recovery of sustained high fuel prices”. In May Qantas cut capacity by 10 percent. During July and August, it expected to reduce capacity a further 5 percentage points and then planned a cut of 10 percentage points in October, Fels said in his report.
Qantas’ said at the time that “The customer impacts from these schedule changes are expected to be minimal, with capacity being removed mostly from high frequency routes. Those affected will be contacted directly with alternatives as close as possible to their original timing, usually within 1-2 hours.”
This assessment is not credible, Fels said.
During this time Qantas was also cancelling flights at a higher rate and frustrating customers. Qantas has been accused of making cancellations as part of a deliberate strategy of “slot hoarding”. Slots give a specific airline a specific slot or time to access an airport and airlines can lose those slots if they don’t use them for a prescribed period of time or fall below a certain percentage of use.
The report also addressed planes by Qatar Airways to boost flights to Australia, a move that was strongly opposed by Qantas.
In his report, Fels said “in essence Qatar offered a solution to the extremely high prices that were being charged for international travel. Qatar offered to add heavily to capacity by making available multiple planes and multiple seats. The likely effect could have seen 40 percent off the price…However, this proposal was blocked by the Australian government. Quite clearly it was acting in the interests of Qantas”.
Fels also said that “increased competition within routes dramatically affects airfares. With a second airline reducing fares by 29 percent and a third operating airline reduces prices again by 31 percent. Consumers would be paying less than half of the monopoly price on a given route if three airlines were competing against one another”. Fels added that the Australian government “should use the opportunity of its current aviation review to remove international and domestic restrictions on competition”.
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