ACCC to monitor Qantas, Virgin Australia airfares

Australia's consumer watchdog will keep an eye on domestic fares and capacity for the next three years.

By David Flynn, June 19 2020
ACCC to monitor Qantas, Virgin Australia airfares

The Australian Competition and Consumer Commission (ACCC) will "monitor prices, costs and profits" of domestic air travel over the next three years, alongside its current watch on car parking at Australia’s four major airports.

The move comes as Qantas ramps up its domestic flying and unleashed a sale spotlighting Jetstar fares as low as $19 on major routes including Sydney-Melbourne, while Virgin Australia remains in administration as potential owners circle the failed airline.

“A sufficient level of competition provides consumer choice, and helps to maintain service levels and keep prices down over the long term,” remarked ACCC Chair Rod Sims, adding that "a strong aviation industry is vital for Australian consumers and the economy more broadly, and for our way of life."

At the centre of the ACCC's radar will be "early signs of damage to competition in the domestic airline industry which could harm the long-term interests of consumers," which could then be "quickly acted on by the ACCC and/or provided to the Government."

A close eye on capacity 

A particular focus will be on the practice of adding excessive amount of seats onto certain routes – either as more flights or by using larger aircraft – "in an attempt to damage a competitor or drive them off the route," the ACCC noted.

This harks back to the height of the battle between Qantas and Virgin Australia, when in March 2013 then-Qantas Domestic CEO Lyell Strambi said he would add two planes for each one which Virgin put onto any route in order to protect Qantas' 65% market share.

"We've made it very clear we'll be sensible in terms of capacity," Strambi said at the time." But if a competitor puts one (plane) in, we'll put two in as a group. We're not about to move aside and let anybody walk into our markets without a competitive tussle."

Qantas also draw attention by putting a Boeing 747 jumbo jet on the Sydney-Perth route shortly after Virgin launched its new Airbus A330 'Coast to Coast' service, flooding the premium transcontinental route with hundreds of additional seats per day.

Today, both Qantas and Virgin are suffering from the after-shock of the coronavirus pandemic and see the reopening of state borders and the easing of travel restrictions as a welcome chance to get back in the air.

“We have a lot of aircraft on the ground with fixed costs attached to them, so if we can put some of them back in the air by offering special fares, it’s a positive for us, for our people, for tourism and for consumers," explained Qantas Group CEO Alan Joyce, in relation to this morning's Qantas sale.

In announcing the ACCC's new brief, Federal Treasurer Josh Frydenberg said "a key matter covered will be the level of capacity the airlines are putting on each route and whether this is occurring in a way that may damage competition."

Frydenberg also said the ACCC would "provide another avenue for those wishing to raise concerns about anti-competitive conduct in the domestic air passenger sector."

The airlines respond 

“Australia’s aviation sector is extremely competitive and all indications are that it will remain that way," Qantas said in a media statement this afternoon.

"What the ACCC can expect to find through its monitoring in the near term is Qantas and Jetstar flying its domestic aircraft to generate cash rather than leaving them on the ground costing money. This is good news for consumers because it means lower fares, good news for tourism because it will stimulate travel demand and good news for our people because it means more work.”

A Virgin Australia spokesperson said the airline "welcomes new monitoring to help ensure Australia’s aviation sector remains competitive, particularly as we move to increase flights as travel restrictions ease."

"Maintaining a competitive aviation sector is important for consumers, Australian tourism and the country’s economic recovery post COVID-19."

Also read: Qantas, ACCC clash over refunds for cancelled flights

David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

08 May 2020

Total posts 55

Selling airfares that far below is definitely Dumping and it is anti competitive and must be stamped out. Prices must meet the minimum break even Fare cost. 18-19 Dollars for any Flight is dumping. You can barely get a Taxi Ride for that. All we want as Travellers are Fair prices on any travel routes.

Bang on pete sw and if it means a spare seat in a row of three (for separate parties) then a small adjustment upwards is OK in my books as well. Don't want to see this dumping happening to be honest and Qantas still trying to kick VA whilst they are down again, is another disreputable act.

You are both aware that the concept behind these prices is to stimulate the market and get people flying again? Once there is some form of new normality and regular forward bookings, these tickets will probably be few and far between. At this point in time both airlines are taking a big risk in putting so many flights in the air in July with such limited time to sell the seats.

08 May 2020

Total posts 55

It is big Brother showing of its muscles, in other words this is my market keep out. that is exactly what Qantas did when they introduced Jetstar against Virgin Blue. since then we have seen this crazy sales of 1 dollar fares or 19 dollars. $ 100 Dollar Fares attract Travel Guests as well and keeps sanity for Companies to survive.

QF

11 Jul 2014

Total posts 533

From a business point of view any money coming in whether it is below cost or not is better than no money coming in for a vacant seat. On saying that it is also possible for VA to do a Qatar and increase market share if they can get cracking quick enough. Let's get the racing flag drop and get back to business for everyone.

Qantas - Qantas Frequent Flyer

07 Aug 2013

Total posts 203

There are literally only a handful of $19 fares per flight - it's just one fare bucket. Good luck finding them.

23 Oct 2014

Total posts 186

Go hard here ACCC, act early and decisively and come down extremely hard on any dumping.

Qantas - Qantas Frequent Flyer

22 Nov 2019

Total posts 45

i was able to book $38 return Melbourne to Adelaide return (without luggage) this morning for a quick business trip but at the payment page I closed the page as the endorphin rush getting such a cheap fare would have worn off by the time I actually had to climb aboard the orange and grey rocket cramped even more than on Alan's 737.

Qantas - Qantas Frequent Flyer

06 Apr 2011

Total posts 106

Wouldn't you have had to self-isolate in SA for 14 days given the SA-Vic border is closed?

Qantas - Qantas Frequent Flyer

22 Nov 2019

Total posts 45

Hi Agfox It was for mid July so hopefully not by then

Qantas - Qantas Frequent Flyer

06 Apr 2011

Total posts 106

Thanks for clarifying. I hope conditions have improved sufficiently by then to enable travel between all States & Territories to resume without any encumbrances.

25 Sep 2019

Total posts 2

Truly wish the ACCC would take a closer look at Travel Insurance Companies not doing the right thing and offering customers either a full refund or a full credit note on their unusable policies during this very stressful time!!!

04 Dec 2017

Total posts 60

I wish the ACCC would do the same with regulating petrol prices like they do in Canada. People aren't taken for fools and ripped off when it suits the the service station.

Virgin Australia - Velocity Rewards

07 Dec 2015

Total posts 47

I know times are a bit weird at the moment but the searches I did for a BNE-CNS return in July where ridiculous, particularly VA - no dumping there and not ‘stimulating' the market based on price that's for sure! I can't imagine loads being great?

19 Jun 2020

Total posts 2

Dumping excess capacity on competitor's routes and predatory pricing is part of the modus operandi of Qantas. AJ stood in front of the camera recently and told everyone how he welcomed competition and didn't want a monopoly. My first thoughts were "Liar, liar, pants on fire ". And my second thoughts were to sing the kids crocodile song through in my mind to myself as his false supercillary smile was all over his face. "Never smile at a crocodile, no you can't get friendly with a crocodile, don't be taken in by his friendly grin, 'cause he's just seeing how you'd look within his skin ".

Every domestic competitor or start up gets the same treatment from Qantas. It fiercely protects its domestic network. But if you look at its international flying, COVID-19 excepted of course, it's a dismal picture. 550 million people in Europe are only worth one airport, LHR, 1.4 billion people in China get 2 airports, HKG and PVG, and predominantly from SYD of course. 1.3 billion people in India get no flights to any airport, 330 million people in US get direct flights to only 4 airports, HNL, LAX, SFO, and DFW, some only from SYD once again, plus the tag from LAX to JFK. Very few flights to any other Asian cities and then predominantly only from SYD. QF seems to be one of the few airlines who don't fly international flights from ADL. And PER gets just SIN, and of course, Project Sunrise to LHR.

And how have QF shareholders fared under AJ's leadership? 7 years without any dividends under AJ, and an average dividend or just 8cps pa.

And how has AJ fared? Just a pathetic piddly little $8 million average pa in salary and bonuses.

So, 8 cps v. $8 million? Sounds fair compensation, doesn't it.

With the right leadership, QF could bring in hundreds of millions of dollars, if not billions of extra tourism dollars and corresponding tourism industry jobs to Australia.

And, instead of exporting Australian jobs to Dubai, China, Singapore and so on, QF could look at flying some of those passengers too.

Qantas - Qantas Frequent Flyer

30 Dec 2012

Total posts 66

QF were about to start flights to ORD from BNE - which joins the routes of direct flights to SIN, NRT, HKG; along with US flights to SFO & LAX.

I agree they do fly to limited international ports directly - and tend to code-share to many, but this is strategic and it's working. QF can't fill a plane to each major city in Europe. But they can from capital in Aust to SIN / HKG (with onward connections).

I believe their EK DXB tie-up was a good deal and personally didn't like the move back to SIN. There are many more options onto Europe from DXB without backtracking. But what QF shouldn't have done was only operate 2 flights to DXB and ccde-share on all other ex.Aust.

Qantas - Qantas Frequent Flyer

22 Nov 2019

Total posts 45

High speed rail anyone?

Qantas - Qantas Frequent Flyer

25 Sep 2013

Total posts 1243

Sure. Where's your business case and funding proposal?

15 Mar 2018

Total posts 39

ACCC should look at how long Qantas is taking for refunds - 89 days and counting.

15 Mar 2018

Total posts 39

Yes, 89 days and came through late today!

15 Mar 2018

Total posts 39

Now to work on the Qantas Insurance for these flights.


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