Australian Domestic Airlines in full recovery –

Australian Domestic Airlines in full recovery

According to statistics published by the Australian Competition and Consumer Commission in its June Airline Competition in Australia report, Australia’s domestic airline industry is nearing full recovery. In publishing its report on June 8, 2022, the independent competition and consumer authority focused on data obtained from April 2022, as part of a broader review of domestic airline competition in Australia. The data reveals a post-pandemic recovery representing almost 90% of pre-COVID levels, as well as increased competition between airlines and airfares.

Highlights of the report, as defined by the ACCC, include evidence of increased consumer confidence despite new COVID variants, as well as consumer benefits from increased airline competition, concerns regarding rising fuel costs and their impact on passengers, and an assessment of the Australian domestic market. market share. The report concludes with lessons that Australia can learn from the analysis of domestic air carrier competition in Canada.

The rise in passenger numbers began earlier this year, following the easing of travel restrictions in several Australian states, including Queensland and Western Australia. The opening of borders peaked with the peak of 4.5 million passengers in April during the Easter holiday period, reflecting 89% of pre-pandemic levels. Of this 89%, Qantas (including Jetstar) reported 110% flight capacity, with the first airports to reach and exceed their passenger numbers in 2019 being holiday hotspots, Gold Coast Airport and Sunshine Coast airports.

In terms of popularity and route growth, the Gold Coast has proven to have the highest recovery rates, with some routes far exceeding pre-pandemic figures. The three most popular routes – all destined for the Gold Coast – included the Canberra route, peaking at 193% of pre-pandemic levels, Melbourne at 126% and Adelaide at 125%. On the usual ‘Golden Triangle’ – routes between Sydney, Melbourne and Brisbane – increases were also noted, with Melbourne-Sydney reaching an 82% recovery with 563,000 passengers, Brisbane-Sydney at 81% with 322,000 passengers and Brisbane-Melbourne growing fastest at 89% with a total of 272,000 passengers.

While the data shows strong consumer motivation for vacations due to the easing of restrictions, the report noted additional factors for an increase in travel, such as increased competition. The expansion of regional airline Rex, which has challenged both the Qantas Group (including Jetstar) and Virgin, has led to lower airfares, with the report saying “increasing numbers of Australians are benefiting from the direct competition between the 3 main airline groups”. Qantas and Virgin having lowered their prices to match or reduce Rex’s airfares in previous months.

Despite fears that airfares have bottomed on the back of rising oil prices, industry and consumers are increasingly vocal in saying Qantas’ actions have hurt the country. The three main factors behind this negative perception of the Australian flag carrier revolve around poor customer service, alleged “anti-competitive behaviour” and its proposal to buy all remaining shares of Alliance Airlines.

Reinforcing this perception, the report specifically mentions the three aforementioned factors, with the ACCC noting that it examines each of the issues.

Regarding poor customer service, the report said: “The ACCC is reviewing these issues, including whether Qantas’ conduct may raise concerns under Australian consumer law.” The issues, mentioned in this opinion piece, include long call wait times and a credit policy where passengers can only use credits for flights of equal or greater value than their original reservations. Addressing this concern, the report states: “The practical effect…is that customers seeking to book using flight credit issued for flights booked on or after October 1, 2021 are forced to use a booking portal from different flight and in some cases are not shown the cheaper fares that may be available when booking using other payment methods on the Qantas website.”

Qantas customer service has since sunk to new lows, with a travel website Traveler adding recently that “rants currently far outweigh raves…with complaints to Traveler about Qantas overwhelmingly dominating our inbox”, adding that he was “about to have to declare a break on Qantas-related missives”. Problems, such as lost luggage, have been blamed on a third-party contractor after Qantas outsourced around 2,000 workers despite billions of dollars in government support over the years. Recently, Qantas lost an appeal against the Australian Federal Court’s ruling that the dismissal of these workers was unlawful, further damaging the airline’s reputation.

Regarding Qantas’ alleged “anti-competitive” conduct, the report notes: “In concluding our investigation, we noted that a range of factors had an impact on the competitive dynamics in the market at the time, in particular restrictions on COVID-19 related movement and border closures,” adding that “COVID-19 related measures have now been relaxed which will simplify the assessment of the impact of any future increases in capacity or pricing practices. airlines in response to new competition. The ACCC will continue to pay close attention to any behavior that may be anti-competitive. The investigation began after Rex complained that Qantas had added capacity to routes that were both historically low in passenger numbers and operated by Rex, with its CEO, the Honorable John Sharp AM, saying: “This behavior is all the more unconscionable after receiving over $2 billion in federal bailouts over the past 2 years.

Qantas is also under intense scrutiny after recently offering to buy shares in Australian carrier Alliance Airlines. Already owning 19.9% ​​of the shares, Qantas plans to acquire all the remaining shares, raising concerns about the impact on competition from national airlines. Alliance Airlines already leases planes and supplies parts to Virgin, as well as long distance flight services to mining communities in regional Australia. In this regard, the report stated: “We are evaluating the proposed acquisition to determine whether it has the effect or is likely to have the effect of substantially lessening competition.”

The ACCC report concluded with the comment that “Australian consumers may have missed out on cheaper travel and additional routes because fewer airlines have entered the Australian market”. In its assessment of domestic aviation, comparing Australia and Canada with economic and geographic similarities, the ACCC found that Canada’s low-cost carriers (LCCs) were the main driver of domestic growth. This growth has been attributed to both new and expanding airlines, offering “affordable travel and competition”.

Speculating that Qantas subsidiary Jetstar has exploited LCC’s gap in Australia for the past ten years, the report states that “any potential LCC would have known it would need to compete head-to-head with a profitable and well-established rival with strong financial backing from a major airline group, potentially deterring new entry It is the Canadian example that gives confidence that newcomer Bonza can establish a foothold in Australia to further increase competition and growth in what the ACCC considers it a “concentrated” airline industry.

The report expressed confidence in Bonza, stating that: “Canada’s experience suggests that Australia’s domestic market may be large enough to sustain more competition than the traditional duopoly of Qantas Group and Virgin, such as that offered by Rex and Bonza.

  • Mike’s love affair with flight and mechanical objects in the sky began at a young age, fascinated by space documentaries and forever inspired by his early experiences with Flight Simulator ’95. He is currently working as a UAV flight instructor and is training to receive his private pilot license with the goal of working in manned flight instruction. An avid reader of all things aviation and human spaceflight, Mike stays close to aerospace developments while reminiscing and sharing the rich history of flight with others. He loves writing, engineering and science.

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