Virgin Australia has called on the federal government to work with the carrier in future dealings with Qatar Airways, after it blocked the gulf carrier from doubling its flights to Australia last month.
Virgin head of sustainability and corporate affairs Christian Bennett told a senate inquiry in Adelaide on Monday that Transport Minister Catherine King’s decision was detrimental to the airline while benefiting its bigger rival, The Qantas Group.
Virgin has a codeshare partnership with Qatar Airways, which means it would have profited from the additional bilateral air rights.Credit: iStock
“We would describe this decision as deeply regrettable and a source of deep disappointment. The unintended consequence is that it negatively impacts the competitive position of Virgin Australia domestically and internationally in favour of our larger rival,” Bennett told the inquiry.
Virgin has a codeshare partnership with Qatar Airways, which means it would have profited from the additional bilateral air rights. Virgin’s market share on the Australia, Europe and Middle East routes would have risen from 25 per cent to 27 per cent.
Rival Qantas, which has the same codeshare arrangement with Emirates, sits at 43 per cent across those routes. Qantas flies twice a day to London and three times a week to Rome in peak periods.
Qantas International boss Cam Wallace.
“We chose Qatar as a historically strong support to Australian aviation, and they’re a world-class product. We would hope we can find a way to solve this impasse through a constructive solution-orientated discussion with the government as we are collateral damage,” Bennett said.
Qatar’s application to fly to Australia 21 times a week would have put downward pressure on fares and added 800,000 to 1 million additional flights between Australia, Doha and Europe each year. The rejection by King’s department has been the subject of much outrage across the bulk of the aviation and tourism sectors, particularly as there has not been a forthcoming explanation from the government.
Newly minted chief executive of Qantas International Cam Wallace said the backlash surrounding the Qatar decision had been overblown. Qantas did not support the additional flights despite Qatar and Qantas being members of the Oneworld alliance.
“The current debate on traffic rights completely distorts the broader dynamics in the market at the moment, and how competitive it is,” Wallace said. “We understand people always want cheaper fares, but that will come in a sustainable way from the recovery that is already in full swing.”
Wallace also rejected allegations Qantas has influenced the cost of international airfares.
“This is a highly competitive market that Qantas has an 18 per cent share of,” Wallace said. “The idea we are setting prices for the market as a whole is false. There are international routes we’d like to add and places we’d like to fly more to but can’t because we don’t have the traffic rights. Fiji is just one example where further expansion by Qantas has been declined,” Wallace said.
The number of international flights to Australia is increasing. Sydney and Melbourne reported more international travellers passed through their respective airports than domestic in July for the first time since before the pandemic. Since May, airlines serving Australia have added 1.7 million annual one-way international seats. Over the next 12 months, an additional 6.4 million one-way seats will be added, an increase of 34 per cent.
This month, Singapore Airlines and China Southern Airlines respectively announced more new flights to Australia than Qatar applied for. The carriers can do so as their countries have uncapped traffic rights with Australia in an arrangement known as open-skies agreements. Australia also has open-skies agreements with the US, UK, India, Japan and New Zealand.
Melbourne Airport chief executive Lorie Argus recently called on the government to consider additional open-skies agreements with more countries to lower airfares faster.
Qantas on Monday also announced a host of new international services that will add about 250,000 seats to its network next year. The new flights include a ninth Sydney to Los Angeles service from July 2024, increasing the Sydney to New York via Auckland route to daily from August 2024 and swapping from Boeing 787s to Airbus A380s for additional seats on other routes including Sydney to Johannesburg from July, Melbourne to Los Angeles and Sydney to Bali.
Qantas cops class action
Meanwhile, a class action has been lodged against Qantas in the Federal Court after more than $2 billion in flights were cancelled due to the COVID-19 pandemic.
Law firm Echo Law submitted the claim on behalf of customers on Monday, alleging the airline has failed to be transparent and immediately issue refunds to customers when the flights were cancelled.
“While COVID posed major disruption to air travel and resulted in cancellations that no airline wished to make, that is no excuse for Qantas to take advantage of its own customers and effectively treat them as providers of over $1 billion in interest-free loans,” Echo Law partner Andrew Paull said.
“We allege Qantas breached the law by failing to be transparent and immediately issue refunds to customers when flights were cancelled. Instead, Qantas held on to its customers’ money and pushed out travel credits with strict conditions, which we allege it was not entitled to do. It now needs to be held accountable and refund that money with interest.”
Qantas and its budget subsidiary Jetstar have been under pressure to reduce the sum of passenger credits, which totalled $2 billion over the two years to October 2021.
The airline has launched multiple initiatives to get customers to opt for a refund or travel credit since amassing billions of dollars in unused customer fares in 2020. It has extended the deadline for when the COVID-19 travel credits are set to expire three times, with customers now able to use their travel credits until the end of 2024 so long as the trip is booked by December 31 this year.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.