Australian watchdog flags concerns over frequent flyer programmes

Australia’s competition watchdog has expressed concern about airline frequent flyer programmes, flagging the potential for unfair pricing and anti-competitive practices. “Loyalty schemes have the potential to raise competition concerns,” the Australian Competition and Consumer Commission (ACCC) says in an investigation report on a broad range of loyalty programmes. “This can occur depending on the extent to which loyalty schemes ‘lock up’ customers and introduce switching costs that increase barriers to entry and expansion for rival firms.” For airlines, the commission notes that this has already happened in other markets. In Sweden and Norway, local competition authorities determined that SAS’s EuroBonus frequent flyer loyalty scheme created obstacles to new entry. The ACCC acknowledges that Qantas’ Frequent Flyer scheme “might have a significant impact on barriers to entry and expansion for the domestic business traveller segment”, though there isn’t any evidence of this to date, while Virgin Australia has successfully grown its Velocity programme and market position. These have also made significant contributions to the parent airlines’ overall earnings. Story has more.<br/>