Qantas and Virgin’s dominance of the air travel market has led to higher prices and poorer service, the Australian Competition and Consumer Commission says.
The ACCC also said flight cancellations and delays “have gotten worse” with Jetstar by far the poorest performer with 8 per cent of flights in April cancelled, more than double the industry average for the month and four times the long-term average.
The ACCC has also strongly advocated for reform to the consumer guarantees under Australian Consumer Law, to make it illegal for businesses to fail to provide a remedy for consumer guarantee failures, the watchdog’s chair Gina Cass-Gottlieb said on Monday.
“Reform to the consumer guarantees to make them enforceable would dramatically improve incentives for all businesses, including airlines, to comply with their obligations and more effectively protect consumer rights,” she said.
The ACCC’s latest report on the sector said the cost of some flights had skyrocketed compared with pre-COVID fares. It cited the Cairns to Gold Coast route, where prices are up 129 per cent and Adelaide to Brisbane, which is up 121 per cent.
Only about 72 per cent of flights arrived on time and the Qantas-owned Jetstar reported 60 per cent of its flights were on time.
A third of all flights between Sydney, Brisbane and Melbourne were delayed in April.
The ACCC said Qantas and Virgin carried 94 per cent of passengers in Australia. Rex has about 4 to 5 per cent per cent of the market while Bonza has only about 1 per cent, but it is expected to increase now that all of its flights are operational.
“The duopoly market structure of the domestic airline industry has made it one of the most highly concentrated industries in Australia, other than natural monopolies,” the ACCC’s report on the sector said.
“The lack of competition over the last decade has resulted in underwhelming outcomes for consumers in terms of airfares, reliability of services and customer service.
“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.
“The expansion of Rex and the entry of Bonza in recent years have created an opportunity for the industry to enter a more competitive period. However, both would need to expand significantly if they are to become meaningful competitors to Qantas and Virgin.
“Domestic airfares have generally fallen in recent months after hitting historically high levels in December 2022,” the ACCC said.
“These falls reflect a number of factors including a decline in the price of jet fuel, an easing of pent-up demand for travel, the rising cost of living becoming a greater concern for consumers and marginal increases to capacity.”
The ACCC has called for legislative reforms to tackle the lack of competition. One issue that was high on its agenda was the scheme that allocates take-off and landing slots at Sydney Airport.
The ACCC report said airlines could hoard the slots to prevent competition. It also wants the federal government to consider incentives that would mean improved customer service.
- This article first appeared in InQueensland and is republished here with permission