‘Qantas Gouges Customers on Fares’ AU Competition Consumer Commission reports

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  • cwoodward
    Participant

    “Qantas Airways Ltd. exploits its dominance of the Australian air-travel market to charge passengers excessively high fares”, according to an inquiry into unfair pricing the country’s antitrust chiefs report issued today states.

    “In 2022, Qantas’ fare increases were so large that a quarter of the country’s inflation was mainly caused by the airline” it states”

    From Bloomberg
    “The findings inflict further damage to the Qantas brand after a string of reputational crises, including allegations by the ACCC that the airline sold tickets on thousands of flights it had already decided to cancel. Fel’s report follows the announcement of multiple government-led inquiries into corporate Australia during the cost-of-living crisis
    New legislation, or a so-called divestiture law, should be introduced to allow the government to break up big businesses for the worst competition abuses, Fels said. He cited similar, successful laws in the US and other countries.

    Such a law could possibly apply to Qantas, Fels said later, after an address to the National Press Club of Australia.

    1 user thanked author for this post.

    AndrewinHK
    Participant

    Some positive stories for anything non CX perhaps cwoodward? Lately, you have posted negative thread topics on Boeing, British Airways, and now Qantas, whilst sneaking in a CX public service announcement ;-).

    2 users thanked author for this post.

    cwoodward
    Participant

    Just the way the interesting reports have fallen in the last few days Andrew.
    There has not been much positivity that is perhaps interesting to post but I do take your point.

    Looking now at my paid aviation news feed of up to an hour ago the first 40 stories are negative happenings -nothing at all positive other than Nepal airlines looking to wet lease one aircraft.
    I am not particularly or exclusively pro Cathay but supported with positive posts them when they had a particularly bad rub of the green and bad press re the pandemic and the long HK lockdown. Also I have enjoyed flying with them this past 50+ years and believe that they are a very good airline who have been particularly helpful to me and our family over the years when things have gone badly wrong while travelling. Our youngest boy is about to fly for them when he finishes university soon thus my interest is active.

    I have several friends there plus many now retired and of course live in HK much of the time these days. Having just retired I have more time to look at aviation news -which interests me and also I write some aviation articles again after many years. (under a different handle).

    3 users thanked author for this post.

    AndrewinHK
    Participant

    I know what you mean, and I am just joshing with you on the Pro CX stuff, I love CX, and I have many friends who are pilots, and how exciting for you and your son, congratulations and wish him all the best! Back to Qantas, they are caught in a bit of a doom loop with a target on their back, luckily they operate in a dominant position domestically, with a loyalty program that should shield them from any serious loss of custom.


    cwoodward
    Participant

    I suspect that it will not be long before Qantas has a new CEO and senior management team who can offer the honed and desperately needed international experience required to avoid the several pending disasters.
    There are more seriously stormy times ahead for the group with past blinkered ego driven decisions rubber stamped by a zombie board of directors coming home to roost.


    Rferguson2
    Participant

    I think this has to be looked at in context.

    Firstly, this report is coming from the Australian Competition Consumer Commission who’s role is very much reflective of its title. Which is essentially to champion consumers.

    Does Qantas dominate the Australian market? Yes and no.

    Internationally? No chance. I think Qantas would DREAM of the stranglehold airlines like BA/LH/KL/AF/CX/SQ etc have in their home markets. Qantas does not even have 60% of the slots out of Sydney, its main hub. It has direct competition on almost every international route it flies and at once stage post COVID, SQ was flying more international flights ex Australia than Qantas.

    Domestically? Absolutely. In a country almost twice the size of Europe yet with a population a third of that of the UK, this is not surprising. Australia is a vast land sparsely populated with 80% of the population in a few cities. There is no high speed rail alternative. People fly between cities predominantly, in fact SYD-MEL-SYD is in the top five busiest air routes in the world.

    Saying that, the domestic aviation industry is completely deregulated. Anyone that has the necessary ownership requirements can set up an airline and compete. But obviously with a population as small as Australia it is hard to ‘stimulate’ demand, especially on new routes.

    This has always been the case. It is nothing new. It is simply that Qantas is very much under the spotlight right now.

    Until the 1990’s the Australian domestic aviation industry was regulated and there was a two airline policy, TAA (the government airline) which then became Australian Airlines and Ansett. They enjoyed a cosy relationship and flying was only for the wealthy with most ‘common’ people using the bus or train for the three day trip between Sydney and Perth! There were some other airlines that cleverly tried to get around the rules of regulation. For example, only Ansett and QF could operate non stop flights between state capital cities. So East West airlines was launched and flew from capital city to capital city via a regional city (eg it flew Sydney to Brisbane via Albury). This had a little impact on bringing fares down however as soon as they become a viable threat Ansett offered a deal the owners couldn’t refuse and East West became owned by Ansett and later totally integrated.

    1990 saw a huge change in the Australian domestic aviation industry when it was fully deregulated. At this point Qantas was solely international, so it was decided in 1992 that Qantas and Australian would integrate as one airline for efficiencies.

    First cab off the rank to compete with QF/AN was ‘Compass’. A brand new airline that went head to head with the legacy airlines on the main routes known as the ‘golden triangle’ (SYD-MEL-BNE) offering fares 50% of what the incumbent airlines were charging. Compass had no business class and initially no FFP and were targeting exclusively leisure travellers that would have normally taken the train or long distance coach. Of course Qantas and Ansett weren’t going to just stand by and watch so they slashed their own fares and matched those of Compass. Compass could not sustain the fare war and folded just over a year after launch. Although price matching at were likely unprofitable fares would have been a factor Compass oddly made the decision to launch their new airline with brand new wide bodied aircraft (A300’s) that would have cost a pretty penny to lease.

    Compass had such a consumer fan club that Compass Mark II was then launched about 9mths after the original Compass went bust. It launched with a slightly different business plan – it leased older (and cheaper) MD83 aircraft and also featured a business class cabin. But again it went bust soon after; it’s two or three daily flights between Sydney and Brisbane or Melbourne were not as attractive as the half hourly services by Ansett and Qantas.

    It was then back to the cost duopoly of Ansett and Qantas although lower fares did seem to be in Australia to stay.

    Impulse Airlines also appeared on the map in 1992 although they focused on linking regional cities with capital cities instead of going head to head on the ‘golden triangle’. We will see a common theme here – Qantas acquired them in 2001 and they became ‘QantasLink’.

    The next big shake up was 2000 when SRB brought the Virgin brand to Australian aviation as ‘Virgin Blue’. They would become Australia’s first Low Cost airline although with much more substantial capital than Compass had and carved out a nice little niche of the market.

    In 2002 Australia was rocked when Ansett went bust. The public was shocked as Ansett had been around for ever and seemingly successful. Although best known as a domestic airline they now also had 747’s and were flying to Hong Kong and Japan. But 9/11 had just happened and Ansett needed capital injected rapidly. Air NZ who was the largest single shareholder said no thanks, and that was the end of Ansett. Leaving Qantas as the one full service airline domestically.

    The Ansett demise was of course music to Virgin Blue’s ears who not only took on many of Ansett’s assets and staff but also rebranded as ‘Virgin Australia’ and became Australia’s new full service airline. Virgin seemed to be doing great, taking on A330’s and 777’s and launching long haul flights to Asia and the US with an incredible business class product. But again, much of this was a smoke screen and their costs were spiralling. Even before COVID Virgin shed its international routes and wide bodied aircraft and was struggling. COVID hit and they went into administration.

    Post COVID Virgin has reappeared as a hybrid model with new owners operating 737 aircraft only.

    REX has also branched out from being solely a carrier linking regional centres with prop jets to operating 737’s on the trunk routes in competition with Virgin and Qantas. Like Virgin it has a hybrid model of a business class and economy class. Financially, these routes have not yet turned to profit and REX’s owner blames Qantas.

    We also have BONZA which is very much following the Ryanair model of ultra low cost flights between secondary airports (Think Maroochydore to Launceston).

    The reality is, there is choice. Australians have a love-hate relationship with Qantas but people seem to like flying them domestically. Their OTP is now the best in Australia(Copied and pasted from Australian Bureau of Statistics – DEC 2023): Qantas achieved the highest on time arrivals among the major domestic airlines at 67.8 per cent, followed by Jetstar at 63.0 per cent and Virgin Australia at 53.5 per cent. Of the regional airlines, Skytrans recorded 76.4 per cent for on time arrivals, followed by Rex Airlines at 70.6 per cent, Virgin Australia Regional Airlines at 71.0 per cent, QantasLink at 67.9 per cent and Bonza at 55.0 per cent.

    Also, QANTAS frequent flyer is incredibly popular in Australia. It has over 15 million members in a country of 25 million. They have lounges at pretty much every airport they serve (even smaller ones). SHOULD this allow them to charge a premium? I guess the answer lies in ‘do their customers have a choice of ccarrier’ on the routes they fly. In most cases, the answer to that is YES.

    4 users thanked author for this post.

    cwoodward
    Participant

    The report I believe was re the domestic market although that was not absolutely clear.


    CathayLoyalist2
    Participant

    As with all “enquiries/public” or otherwise when severe wrong doing is incovered, is anyone ever called to account or is going to be another round of hand wringing, tut tut and life moves on?. Has Joyce offically been stripped of his leaving packge?


    FormerBA
    Participant

    Flew with QF in business from SYD to MEL on New Years Day.

    With the exception of the seat it was like flying BA. My hand baggage was weighed just as I entered the security area. A small back pack and when I asked why, I was told it might be filled with gold bars.

    The cabin crew were just miserable

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