The Australian Competition and Consumer Commission (ACCC) has criticised the aviation industry and called for an independent dispute resolution ombudsman to resolve issues between carriers and passengers.
This is attributed to a lack of competition in the sector, which has led to high airfares and higher levels of flight delays and cancellations.
The current aviation sector is dominated by Qantas Group and Virgin Australia, which have collectively carried approximately 90 per cent of domestic passengers over the past two decades. The pair carried about 94 per cent of domestic passengers in April this year, with the Qantas Group accounting for more than 60 per cent of this.
“There is a clear need for a truly independent and external dispute resolution ombuds scheme, which has the power to make binding decisions,” ACCC Gina Cass-Gottlieb said.
These calls have been made in the ACCC’s final monitoring report of Australia’s airline industry, which also highlighted problems with Sydney Airport’s demand management scheme. The scheme controls how many take-off and landing slots are given to an airline.
This scheme has been accused of fostering this duopoly and nudging out Rex and Bonza from Sydney Airport. Bonza has not been able to secure spots at Sydney Airport due to this scheme and the lack of a commercial agreement between the carrier and the airport.
Bonza’s CEO Tim Jordan has been quite critical of the scheme since before the budget airline took off in January this year.
“We as an industry have just gone through the worst on-time performance in the history of records of Australian aviation and no airline has been asked to give up any slots at the country’s busiest airport, as a consequence of existing legislation. That tells you it doesn’t work and it certainly doesn’t foster a more competitive environment,” Jordan told Travel Weekly.
Bonza believes it can service 20 destinations from Sydney Airport. Around 90 per cent of the routes the airline could serve from Sydney currently have no low-cost option for travellers and nearly half of these routes don’t exist at all.
“We would like to see greater access for start-ups and new entrants to peak slots at Sydney Airport, which will allow us and others to offer a more competitive outlook for aviation in a key market in the country,” Jordan said.
Going forward, the ACCC will continue to watch the behaviour of Virgin and Qantas to give other airlines a better chance in the market and will intervene in cases of anticompetitive behaviour.
“Should Rex and Bonza not succeed and withdraw from the market, it will not just result in less competition in the near term but will likely deter new airlines from attempting to enter the domestic industry for many years,” the regulator said.
This report from the ACCC is the last of 12, which were originally implemented by the Morrison Government in June 2020 to monitor the level of competition between Australian airlines and the cost of airfares and airline profit margins.
A spokesperson from Bonza said that the airline is disappointed that this is the last report.
“At a time when there is more competition in the market for Australian travellers, we strongly believe the ACCC can play a key role in protecting competition in domestic aviation,” the spokesperson said.
