Australia fumes over soaring airfares as Qatar Airways flights blocked

Canberra is being accused of protecting national carrier Qantas’s bottom line at the expense of consumers.

Australia's national carrier Qantas has objected to a bid by Qatar Airways to operate more flights to Europe [File: John Donegan/AP Photo]

Bali, Indonesia – Sydney resident Amber Daines Ungar got a shock earlier this year when trying to book flight tickets to Bali for the school holidays in September.

Before the COVID-19 pandemic, airfares to the Indonesian resort island cost as little as 400 Australian dollars ($260) per person.

For her family of four, Ungar was quoted more than 6,000 Australian dollars ($3,900) in total.

“I’d have to sell a kidney,” Ungar, who cancelled her holiday plans due to the cost, told Al Jazeera.

“We had had high inflation, so I knew it would cost more. But it’s hard to justify such high costs for a six-hour flight.

‘National interests’

After soaring during the COVID crisis, the cost of air travel in Australia has remained as high as double pre-pandemic levels – and critics have placed much of the blame on protectionism by the Australian government.

Last month, Canberra rejected a bid by Qatar Airways to add 21 weekly flights to the 28 it already operates between Europe and Sydney, Brisbane and Melbourne.

The proposal would have added approximately one million extra seats annually, putting downward pressure on the spiking airfares.

Transport Minister Catherine King, a member of the centre-left Labor Party, has argued the proposal was not in the country’s national interests, including the “need to ensure that there are long-term, well-paid, secure jobs by Australians in the aviation sector”.

King’s decision came after Australia’s national carrier Qantas lobbied against Qatar Airways’ bid.

Qantas has claimed the extra flights would distort the market despite admitting it will not be able to cater to the pent-up demand for flights for at least five years.

On Thursday, Assistant Treasurer Stephen Jones walked back earlier comments that cheaper airfares would be “unsustainable” for Qantas, insisting he had been talking about the need for a viable and competitive industry, and his remarks had been misconstrued.

Australia’s decision to block a bid to add more flights to Europe has been criticised by tourism industry groups [Edgar Su/Reuters]

Canberra’s move has prompted a backlash from the travel industry and consumer rights groups, who have accused the government of protecting the bottom line of Qantas at the expense of Australians.

The situation has particularly rankled many Australians since Qantas, which reported a net profit of 1.7 billion Australian dollars ($1.1bn) for 2022-23, received about 2.7 billion Australian dollars ($1.75bn) in taxpayer funds to help it stay afloat during the pandemic.

The Australian Chamber of Commerce and Industry (ACCI), one of numerous industry groups slamming the move, has estimated the decision will cost the Australian economy at least 788 million Australian dollars ($511m) annually in lost tourism.

“The decision is going to delay the recovery, keep airfares high, contribute to inflation, damage our tourism industry and the Australian economy,” ACCI chief executive John Hart, who recently paid 11,500 Australian dollars ($7,400) for two tickets to Europe, told Al Jazeera.

Qantas did not answer questions posed by Al Jazeera about its influence in Canberra but said airfares have “fallen materially” and capacity has roughly doubled since the start of the year.

“We understand people always want cheaper fares but that will come in a sustainable way from the recovery that is already in full swing,” a spokesperson said.

“In the past few weeks alone, China Southern and Singapore Airlines have announced more new flights to Australia than Qatar was seeking. So, the idea that we are setting prices for the market as a whole is just false.”

Alan Joyce, chief executive of Australia’s biggest airline, Qantas Airways, speaks during a media conference in Sydney, Australia, August 25, 2017 [David Gray/Reuters]

Qantas’s warnings about market distortion have been widely panned in the local media.

In the Australian Financial Review on Monday, columnist Joe Aston accused CEO Alan Joyce of “gaslighting the nation”.

“Which market is that?” said Aston, whose newspaper’s critical coverage of Joyce previously led to its removal from the airline’s lounges.

“The market in which global travel demand is roaring but Qantas International charges 52 percent more by flying 28 percent less than it did before Covid-19.”

Andrew Charlton, a former chief legal officer for Qantas who now manages Aviation Advocacy, a consultancy based in Switzerland, said Qantas had a “remarkable” hold over the Australian government.

“They received enormous amounts of Covid money, made massive profits while squeezing their workers, let their customer service go to hell and stuffed up badly with their fleet planning, which is why they are leasing aircraft from Finnair for the popular Sydney to Singapore route,” Charlton told Al Jazeera.

“If Qatar was allowed to double its flight capacity and come in with brand new aircraft and great service, Qantas would not be able to respond right now and they argue that would be very bad for the industry. But the truth is it would only be bad for Qantas,” he said.

“The decision taken by the government was not pro-Australia or pro-tourism. It was pro-Qantas and made to give the airline time to upgrade its fleet and build a really good defensive position against carriers like Qatar Airways.”

Qatar Airways proposed adding 21 weekly flights to Europe [Murad Sezer/Reuters]

Rico Merkert, deputy director at the Institute of Transport and Logistics Studies at The University of Sydney, voiced similar sentiments.

“The route between Australia and Europe that Qatar wanted to fill is only being served at about 70 percent of capacity compared to pre-Covid levels,” Merkert told Al Jazeera.

“More flights would have meant more competition, and that would have been a good thing for consumers in Australia and anyone wanting to fly there. It’s a massive lost opportunity because it would have brought lots of new tourists into Australia, on top of business travellers and freight.”

Other analysts are more sympathetic towards the government’s cautious approach to foreign airlines.

“Qantas is regulated by the Qantas Act, which requires it to be a national enterprise so the country has a national interest in protecting the airline,” Gui Lohmann, a professor in air transport and tourism management at Griffith University, told Al Jazeera.

“If Qantas struggles, the government will have to bail them out like it did during the pandemic.”

Lohmann said Qatar Airways’ bid sought to “dominate markets in Australia where strong demand already exists and it has nothing to lose”.

“Once it gets in, it would explore lower airfares, create unsustainable competitive advantage and excise the competition to create a duopoly or even a monopoly, something the airline can easily do because it’s subsidised by the Qatari government,” he said.

“In fact, Australia has very liberal regulations for aviation,” Lohmann added.

“We have a foreign-owned airline, Virgin, that operates in the domestic market, which is unheard of in the US and China, and our airports are privatised. So in many ways, we are at the forefront of regulation.”

Critics say Canberra has chosen Qantas’s bottom line over consumers [File: David Gray/Reuters]

Charlton at Aviation Advocacy says such arguments make the mistake of conflating what is good for Qantas with what is good for Australia.

“But that’s not the case. What is good for Qantas is not necessarily good for the Australian tourism industry, which is 15 percent of our economy. We want more people coming here, and this decision prevents that,” he said.

“At the end of the day, aviation is all about politics,” he added.

“There has never been a major decision that wasn’t about politics. This was no exception.”

Source: Al Jazeera