Did you know there’s an unregulated monopolist in our aviation sector with “a track record of using their market power, with the current regulatory regime providing no constraint on monopoly behaviour or providing any incentive to lower costs or improve quality”?
That’s according to Qantas’ submission earlier this year to the Abanese government on the aviation white paper currently being developed within the infrastructure portfolio.
Is Qantas referring to itself? Heavens no! In fact, “Australia is one of the most liberalised aviation markets in the world and Australian airlines operate in a highly competitive environment. This competition compels the sector to invest and innovate to reduce costs and deliver better service and products to consumers.”
Stop laughing, everyone.
The unregulated monopolists are airports, according to Qantas, which exercise their market power to gouge poor airlines: “Failure to address this will continue to hamper growth opportunities in existing markets, constrain the establishment of new routes and fail to realise economic opportunities (including creating more aviation jobs) for the broader economy.”
Yes, that’s Qantas, which under Alan Joyce was addicted to sacking workers, warning about threats to aviation jobs.
Now, no-one who has ever tried to park at an airport, or buy a beer or a coffee, would disagree that airports are gouging monopolists. Only that’s towards consumers. Just like Qantas, airports see consumers as a target to gouge, rip off and exploit in every possible way. But how do they see poor struggling airlines?
According to the Productivity Commission (PC), Qantas is completely wrong. In its 2019 report Economic Regulation of Airports, the PC devoted two chapters to airport market power and how they negotiated with airlines.
What did it find? “Sydney, Melbourne, Brisbane and Perth airports (the monitored airports) have significant market power in domestic and international aeronautical services.” But: “Constraints on an airport’s exercise of market power include countervailing power, airline bargaining power more broadly, and the level of demand for airport services. Qantas Group, Regional Express and Virgin Australia Group are each likely to have some ability to constrain the behaviour of airport operators.”
Overall, “The commission is satisfied that, on balance, airports have not systematically exercised their market power in negotiations with airlines. Agreements support risk sharing between airports and airlines, and have underpinned significant long-term investment in aeronautical assets.”
There were instances where both sides behaved poorly, and both sides liked to insert anti-competitive clauses in contracts, the commission found, but there was no case for regulatory intervention — though the government could facilitate ways to make the process more efficient.
Qantas instead wants the government to impose a legislated arbitration process that will give airlines more power to present take-it-or-leave-it offers to airports.
Given the mysterious hold the airline exerts over the government, that could see the aviation white paper process used to give Qantas yet another leg-up. After all, the Albanese government has refused to allow increased international competition from Qatar Airways and Turkish Airlines — despite international air fares being a notable contributor to the June quarter inflation figures. It has refused to establish an independent complaints-handling body for the airline industry despite the ACCC identifying Qantas as the country’s most complained-about company. And it’s cut funding for the ACCC to continue monitoring domestic air fares.
But that’s not all Qantas wants. Given greenwashing is the regulatory flavour of the month, how’s this for using the environment as a shield for corporate self-interest: Qantas wants the government to support a local sustainable aviation fuel (SAF) industry (“Aviation has been at the forefront of the global business response to climate change,” Qantas says, in defiance of the fact that air travel is one of the worst sources of CO2 emissions outside extractive industries). But it will rely “on the implementation of supportive policy settings and sector-wide incentives”.
The “supportive policy setting” Qantas wants is a mandate to force airlines fuelling in Australia to use SAF — just like the EU has recently implemented. Sounds good, yep? An airline finally doing something real about emissions! Except a mandate will mean the higher price of SAF will give Qantas cover to increase fares yet again, this time on the basis that it’s doing the right thing on climate, and it will push up barriers to entry for potential competitors, who will face significantly higher fuel costs to commence in a market already dominated by a predatory incumbent.
Qantas even suggests SAF be deemed a “strategic fuel” — a buzzword that should set alarm bells ringing.
In the current environment where it seems that what Qantas wants, Qantas gets, how long before the government acts to deliver on the airline’s agenda?
Remember those crazy days when the Australian government owned the airports?
And along with Qantas, run by public servants on a public service salary.
When we got to use our sovereign Port of Darwin
Nationalising the airports makes a lot more sense than nationalising an airline.
We don’t have to nationalize the airports, they are on leases.
The way Brisbane, Melbourne and Sydney appear, the leases should not be renewed.
No fast train any time soon, then . . .
Seems that’s right, and that is the biggest problem we have in terms of Australia’s domestic travel emissions. If we had fast trains Melb-Syd (2hrs 40mins centre to centre) most of us would choose it over flying, and the emissions on that route would be about 15% of what they are now. No brainer? I reckon.
Amen. We needed fast rail on the eastern seaboard 20 years ago.
Hah! Fast rail would require governments which governed for the livestock, I mean people.
….. Who could have seen this sort of business-as-usual market manipulation coming when QANTAS was ‘privatised’?
Get the impression that the govt along with most of our population feel that Qantas is Australia’s own airline.
Bernard missed the bit where Joyce booked heaps of flight slots in Sydney, then subsequently didn’t use them, all with the aim of denying them to others.
And Ansett sold to A nz – in the black – voila parent company – sucks benefits off shore
Obviously not Mr Schaltenbrand who was the Federal Minister for Transport and oversaw its privatisation. Same as he did when he was Minister for Finance when the Commonwealth Bank was being privatised in stages or “tranches”.
Started watching in horror as all this madness took off in the early 90s, and just couldn’t believe how little pushback there was against mass privatisation of everything, when the scam seemed just so obvious.
Pretend smart people going along with the koolaid tsunami, pooh-poohing folks like me rightly calling them lemmings. And most of them are still doubling down thirty years later; it beggars belief.
Wondering how many in Cabinet will need to abstain and excuse themselves based on the freebies and handouts that QANTAS, the other airlines and airports sprinkle around our Pollies
QANTAS in the last week or so, has extended to Nathan Albanese (ie PM’s son) access to the Chairman’s Lounge. That’s the Quid. How many Quos I wonder. Was it stopping Qatar and Turkish Airlines from getting more access to the Australian market, thus protecting QANTAS’ market share and prices, or something more?
We’re light years away from an undeclared teddy bear bringing down Bill Hayden…
That was Mick Young in 1984, the last Labor politician who ever did a stroke, let alone hard yakka (as a shearer) in the real world.
His like will not be seen again in the Party of soft hands/hard hearts and the country is all the worse for that.
Qantas under Joycey have become mean, useless and expensive. I can cop one of those from a company if they aren’t the other 2. Whilst the political class are in thrall of the Chairman’s Lounge I don’t see anything changing. I’ve always thought that industrial corruption was cheap in Australia given the sums involved.
Yup, close The Chairman’s Lounge, or charge appropriately.
The other issue with Chairman’s Lounge is that the politicians and the rich and famous never get to see what the Real World is like.