A Coalition-led inquiry into Australia’s aviation sector has called for reforms that could include the power to break up Qantas amid outrage over stifled competition and the airline’s potential influence over government decision-making.
The opposition and Greens have teamed up to accuse the Albanese government of being too close to the national carrier in the findings of an inquiry launched after Transport Minister Catherine King rejected a bid by Qatar Airways to double its flights into Australia.
Travel industry and competition experts have argued the extra Qatar flights would have brought down airfares.Credit: Brook Mitchell
After hearing allegations of anticompetitive behaviour within Australia’s aviation market, the inquiry found the government should consider regulatory reforms to strengthen competition, “including potential divestiture powers to remedy any misuse of market power”.
Former Australian Competition and Consumer Commission chair Allan Fels told the inquiry he was “strongly in favour” of divestiture powers. “I believe it would have a very big effect on behaviour, including by Qantas,” he said.
The inquiry report, released on Monday, recommended the Qatar decision be immediately reviewed, the consumer watchdog be consulted in the future, and reasons for all decisions be published, along with a cost-benefit analysis, after the opposition accused Labor of evading scrutiny over the decision.
Nationals senator Bridget McKenzie chaired the inquiry.Credit: Oscar Colman
“The government sought to prevent the committee from fully investigating the reasons why additional Qatar Airways flights were rejected by refusing to release documents and placing a gag on the infrastructure and foreign affairs departments,” said Nationals senator Bridget McKenzie, the inquiry chair.
King refused to front the inquiry when called, accusing the Coalition of staging a political stunt, while former Qantas chief executive Alan Joyce didn’t attend due to prior overseas commitments.
The committee recommended the Senate request the House of Representatives give King leave to appear before a potential second inquiry, comprised of the same members, which would also summon Joyce.
The committee has also recommended the government implement consumer protections against significant flight delays, cancellations and lost baggage, in an attempt to repair the standing of the Australian aviation market amid rising customer resentment.
Queensland Greens senator Penny Allman-Payne used her dissenting report to share the committee’s concerns relating to the transparency of the decision, and said the public was right to question it after hearing of the extensive relationship between Qantas and the government.
“It is clear that Qantas enjoys a special relationship with the Australian government, more so than should be typical for a private corporation,” she said.
But Allman-Payne said more competition alone wouldn’t reform Qantas and called for the government to buy back a stake in the national carrier, which she said the inquiry failed to sufficiently examine.
Travel industry and competition experts have argued that, had Qatar’s application been granted, the extra flights would have brought down airfares and added up to $1 billion a year to the Australian economy.
However, dissenting government senators, Tony Sheldon and Linda White, defended King’s decision as being in the national interest, highlighting her revelation that the invasive strip-searching of Australian women in Doha in 2020 was a factor in the refusal.
The inquiry heard from several top airline officials, including Qantas chair Richard Goyder and new Qantas CEO Vanessa Hudson, who faced hostility from the committee over the airline’s illegal sacking of workers, its persistent lobbying of governments and its treatment of customers.
On the same day, Qatar executive Matt Raos told the committee the airline was “surprised and shocked” when its application to double its flights was rejected in July. He said the airline generated $3 billion in economic benefits for Australia and had continued to fly into Australia during the pandemic.
Transport officials told the inquiry that only Qantas and Virgin were consulted before forming their advice, which was finalised on January 4 – six months before the minister made her decision to reject it, on July 10.
Virgin chief executive Jayne Hrdlicka told the inquiry she had spoken with King on January 20, and that King had indicated the mandate for negotiations with Qatar would be released the following week.
Transport Minister Catherine King refused to provide information to a Senate inquiry into her Qatar Airways decision.Credit: Alex Ellinghausen
Hrdlicka, whose airline is a commercial partner of Qatar Airways, also told the committee King said she was expecting to meet Joyce the following Monday, and that he had conveyed he was displeased the government was entertaining Qatar’s application for extra flights.
King’s office refused the committee’s attempt to find out, via a senior department official, whether King had met with Joyce on that Monday, January 23.
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