What's the scam

The ACCC has just released its latest report on domestic airline competition. It concludes that there isn’t enough of it, hence we – air travellers – get poor service and pay too much. So what’s the scam?

The scam is that the ACCC knows this, the Government knows this, travellers know this. Except for Qantas CEO Alan Joyce, everyone who has either been on a plane or knows someone who has, knows this. And we’ve known this for years. Yet nothing happens.

According to the 35 page report, the 12th such report in three years, “Our monitoring role has significantly expanded the ACCC’s knowledge of the airline industry,” and

we have developed a deep understanding of airline practices that may contravene the Competition and Consumer Act 2010 (Cth).

Some of the facts presented in the report (figures from April 2023):

  • 3.9% of flights cancelled – the long time average is 2.1%
  • Jetstar cancelled 8.1%
  • 71.8% of flights arrived on time – meaning over 12,000 flights arrived 15 minutes late or more
  • Jetstar flights arrived on time 59.7% of the time

The introduction of Bonza and the growth of Rex offers some additional competition. However, as Bonza airlines mostly fly ‘secondary’ routes, and Rex doesn’t have the capacity to compete on the number of departures, neither challenge the Qantas/Jetstar and Virgin duopoly where it matters, on the capital city routes. Qantas/Jetstar and Virgin carry 94% of passengers in Australia, down from 95% a year ago.

Only 41% of flights are on routes contested by more than two airlines.

So what is the ACCC actually doing?

To be fair, they did refuse the Qantas acquisition of Fly-in/Fly-out operator Alliance Airlines on the grounds it would reduce competition. Why it took the ACCC a year to work that out is another question.

Other than that, not much. The report says that “there is a clear need to introduce a new system for resolving disputes between airlines and consumers,” hints at the introduction of an Ombudsman for the airline industry, and pokes at a suggestion of mandatory penalties for late and cancelled flights.

None of these measures are going to make much of a difference. New dispute and compensation mechanisms will take years to implement and have a marginal effect at best, and penalties will just be added to the airlines’ cost and hence to the price of tickets.

The real issues remain privatised airport operations that stifle competition, and not allowing international airlines with superior service records to contest the main capital city routes effectively.

Until the Government has the guts to tackle those, the scam of crap service and high prices for airline travellers in Australia will continue unabated.

Alan Joyce to depart. Is it time for Qantas to retire Jetstar too?


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