Qantas and Virgin given little incentive to cheapen air fares, watchdog warns

Australian aviation is at a “critical juncture”, with policy shortcomings allowing for a duopoly marked by higher air fares and poorer service, the consumer watchdog warns, as it loses extra resources to scrutinise the sector. Qantas Group – including budget carrier Jetstar – and Virgin Australia have carried 90% of domestic passengers over the past two decades, and as many as 94% in April this year, according to the Australian Competition and Consumer Commission’s (ACCC) quarterly domestic aviation monitoring report released on Monday, the final edition of the three-year task. Average revenue per passenger – while down from last December’s record air fare peak – remains just above pre-pandemic figures even when adjusted for inflation but the number of passengers and seats flown by airlines hovers just under 2019 levels. ACCC chair Gina Cass-Gottlieb noted the high market concentration in Australian aviation is rivalled only by natural monopolies such as electricity grids and rail networks. “Without a real threat of losing passengers to other airlines, the Qantas and Virgin Australia airline groups have had less incentive to offer attractive airfares, develop more direct routes, operate more reliable services and invest in systems to provide high levels of customer service,” Cass-Gottlieb said. Cass-Gottlieb’s comments echo the alarm sounded by her predecessor, Rod Sims, and Australian Airports Association chief James Goodwin in the Guardian last week about the need for an ongoing investigation of the aviation industry, with the latter declaring Australians “are paying too much for airline tickets” as carriers are slow to pass on the almost halving of the cost of jet fuel and labour-force savings to consumers.<br/>