Airline monitoring to end amid concerns of high airfares and big profits

Increased scrutiny of domestic airlines will end in June despite concerns about high fares and big profits for the major players.

Extra scrutiny applied to airlines by the ACCC will end in June, leaving some carriers concerned about what that will mean for travellers. Picture: Brendon Thorne/Bloomberg

Increased scrutiny of domestic airlines in Australia will end in June, after the Albanese government opted not to extend funding for the competition watchdog to monitor the behaviour of local carriers.

The decision means the Australian Competition and Consumer Commission will deliver its final quarterly airline monitoring report mid-year.

A spokeswoman for Transport Minister Catherine King said a domestic airfare index would continue to be published monthly by the Bureau of Infrastructure, Transport and Regional Economics.

The quarterly airline monitoring reports were initiated by former Treasurer Josh Frydenberg in June 2020, to ensure healthy competition in the industry at a time of significant upheaval.

Under his direction, the ACCC was able to require information from the airlines relating to routes, capacity, pricing, passenger loads and financial performance.

Each report provided updates on airfare movements, market share and any other current issues such as flight delays, mishandled baggage and call centre waiting times.

Qantas would not comment directly on the decision not to extend the industry scrutiny but referred The Australian to recent remarks by CEO Alan Joyce.

“We have now four domestic jet airlines operating. We have never had that level of competition today,” said Mr Joyce.

“When we put a low airfare out there, our competition does. That’s the competitive market working.”

The industry’s newest entrant, low cost carrier Bonza, was more concerned about the move at a time when the airline was attempting to carve its own place in the market.

Chief executive Tim Jordan said ending the ACCC’s scrutiny was akin to “leaving young kids unsupervised in a candy store and hoping everything’s going to be okay”.

“The ACCC mechanism was put in place to ensure dominant carriers don’t take advantage of their market position and that same market dominance still largely exists today,” Mr Jordan said.

“As Bonza enters the market that oversight is more important than ever but unfortunately it’s now being switched off. That really doesn’t seem right for the domestic aviation market.”

Bonza CEO Tim Jordan is keen to seen airline monitoring continue.

A spokesman for Rex airlines was similarly concerned.

“At a time when Qantas is gouging passengers with the highest ticket prices in history it’s vital the government continues to closely monitor airfares,” he said.

Virgin Australia declined to provide any comment.

Australian Airports Association CEO James Goodwin said it was a bizarre time to end airline

monitoring given the market was not back to any sort of normality.

“Clearly there are still very strong signals within the aviation sector that the airline monitoring regime needs to continue, given the cost of airfares and the profitability of airlines,” Mr Goodwin said.

“If this is the market and the behaviour that we’re seeing when the sector is being monitored, consumers might be concerned about what might happen when the monitoring stopped.”

He said the entry of Bonza into the market also needed careful monitoring to ensure the airline was given the opportunity to compete fairly.

“If the market’s not being monitored how would anyone know? If ever there was a time to be looking closely at airlines, this would be it,” said Mr Goodwin.

The spokeswoman for Minister King said “if the situation required it” the government would continue ACCC monitoring but she did not elaborate further.

She said the government was committed to delivering an aviation white paper to “set the scene for the next generation of growth and development across the aviation sector”.

“This includes considering as a priority the economic reforms needed to improve productivity across the sector, such as addressing skills shortages and competitiveness,” she said.

An ACCC spokeswoman said the final report on airline monitoring would be produced before the end of June, and those working in that area would move on to other roles within the commission.

“The ACCC will continue to enforce and drive compliance with consumer and competition laws in the airline industry,” she said.