Qantas named and shamed in Fels’ price gouging inquiry

Qantas was singled out for its domination of Australian aviation in an inquiry into price gouging produced by former competition watchdog head Allan Fels for the Australian Council of Trade Unions, which found that Australians are paying too much for everything from energy prices to groceries and childcare.

“Australians are paying prices too high too often, and the cause is weak and ineffective competition,” he said in an address to the National Press Club on Wednesday.

Allan Fels said Australians are facing unfair pricing in many sectors thanks to poor competition across the country.Credit: Alex Ellinghausen

Fels said the consumer watchdog needed more power, and that competition law should be strengthened. Ideally, he said, a law should be introduced that would allow the Australian Competition and Consumer Commission to break up big businesses where a court had found there was a serious breach of competition law.

“Changes to the competition law could be done very quickly,” he said. “That could be done, introduced into parliament within two or three months.”

The ACCC is restricted in what it can investigate, and there is no set of government policies on excessive pricing. Fels said that must change, and it could be legislated within months if the government was willing to address the issues.

He said Qantas dominated the nation’s airline duopoly, and the airline’s price rises coupled with fewer services had economy-shifting effects.

“Qantas’ ability to reduce supply while increasing prices, and suffering no material loss of market share, may have affected CPI [inflation] in December 2022, and therefore may have impacted the Reserve Bank’s inflation expectations and rate increases,” Fels said in the report.

He said the Department of Infrastructure should use its review of the sector to remove “unnecessary restrictions” on competition in domestic and international aviation.

In a statement, Qantas said airfares had dropped significantly from their December 2022 peak, when they spiked due to a combination of post-COVID-19 pandemic reductions in services and the concurrent opening of international borders which fanned high consumer demand.

“While the domestic market is concentrated, it is still highly competitive. There are now four large jet operators, with Regional Express expanding onto mainline routes and the entry of Bonza,” the Qantas statement said.

Fels said he was also concerned about price gouging in the electricity sector, and it required urgent investigation.

“The electricity industry is riddled with questionable prices,” he said on Wednesday.

Fels said the current bidding system used to determine prices at the wholesale level on the east coast was not fit for purpose, and found that businesses and consumers were charged differently for their power, which needed deeper regulatory investigation.

Banking also had a “significant lack” of competition, Fels said, and the position of major banks was protected by the Council of Financial Regulators.

Fels said one way to make the sector more competitive would be to make it easier for consumers to switch banks.

“The best solution is to require bank accounts to be readily portable, in the same way as years ago when the government and the ACCC required mobile phone businesses to enable customers to switch suppliers whilst retaining their existing telephone numbers,” he said.

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