Government warned of ‘grave’ consequences over Qatar decision

The Australian Chamber of Commerce and Industry’s executive chairman John Hart and Virgin Australia boss Jayne Hrdlicka are the latest aviation and tourism executives to urge the federal government to rethink its rejection of Qatar Airways.

Hart wrote to Transport Minister Catherine King on August 15 and said the decision to deny Qatar’s application to double its flights to Australia would have serious financial repercussions for the tourism industry. Hart also asked to meet with the government to explain the chamber’s concerns.

Virgin Australia CEO Jayne Hrdlicka has urged the government to rethink its decision.

“The decision to deny the application has been estimated to cost the tourism industry up to $788 million,” Hart said in his letter, obtained by this masthead. “This is significant revenue that the tourism industry will potentially miss out on at a time when they are rebuilding following the COVID-19 restrictions.”

Hart warned the government against making the bilateral air rights rejection a precedent for future applications from other governments.

“If this decision sets a precedent for consideration of future applications, being that requests for additional flights will not be granted, the loss to the tourism industry will be grave. The growth of Australian tourism is a function of inbound and outbound air capacity, and any limitations on
capacity stunt growth – not only through numbers of seats inbound but also through price competitiveness,” Hart said in the letter, also sent to Minister for Trade and Tourism Don Farrell.

‘If this decision sets a precedent for consideration of future applications ... the loss to the tourism industry will be grave.’

John Hart, head of the Australian Chamber of Commerce and Industry, in a letter to two government ministers

King’s office said it was unable to respond to the claims detailed in the letter as it never received it. But a spokesperson did say the chamber’s suggestion that the Qatar rebuff could set a bad precedent was “speculative and erroneous”.

“Requests for increased capacity from one country to another are decided on a case by case basis. This is always the case for requests for increased access to Australia, and for Australia’s requests for increased access to other countries,” King’s spokesperson said.

The spokesperson also doubled down on King’s previous explanation that the application for additional flights was not in Australia’s national interest.

In her first public comments since King confirmed the decision last month, Virgin chief executive Jayne Hrdlicka on Tuesday said she was disappointed with the decision, particularly given international airfares remain 50 per cent higher than pre-COVID-19. Virgin has a code share arrangement with Qatar, which means it would have directly benefited from additional flights.

“We are deeply disappointed that our partner Qatar Airways is unable to expand its services to Australia,” she said, and doubled down on the carrier’s previous invitation to work with the government to resolve the issue between Australia and Qatar.

“Additional Qatar flights would have an immediate and tangible effect in reducing airfares between Australia and Europe, the Middle East and Africa. Qatar is in the unique position in the context of a constrained global supply of widebody aircraft, to be able to quickly make available 4 additional services per day to Australia,” Hrdlicka said.

Qatar’s application to fly to Australia 21 times a week would have put downward pressure on airfares and added 800,000 to 1 million additional seats 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 an explanation from the government as to why the application was rejected.

Virgin’s bigger rival Qantas did not support the push for additional flights, despite Qatar and Qantas being members of the Oneworld alliance. Cam Wallace, the newly minted chief executive of Qantas International, said the backlash surrounding the Qatar decision had been overblown.

“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.”

Qantas said on Tuesday Qatar has always had the option to increase its seat capacity on existing flights to Australia by exclusively flying Airbus A380S instead of its current Boeing 777/ A380 mix.

“This would immediately increase the number of seats offered by 27 per cent,” a Qantas spokesperson said.

The number of international flights to Australia is increasing. Sydney and Melbourne saw more international travellers passing through their airports than in 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.

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