Is the airline duopoly unbreakable?
Finding a cheap flight can be difficult when two players dominate the aviation market. But there are signs of change.
The headlines this year have been discouraging for Australian travellers who want a broader choice of domestic airlines.
First, in late April, came news that Bonza had gone bust, and then, in late July, reports that Rex had overreached in its attempts to offer capital-city flights.
So that leaves Qantas and its subsidiary Jetstar or Virgin Australia as the only practical way to fly for the vast majority of Australians.
Between them they have a stranglehold on domestic routes, while the Qantas group has the edge in international travel because it’s the “home” carrier and is allowed greater legislative freedom.
Many may argue that it’s right to give some advantage to Australian businesses but, as we’ve seen with supermarkets, does having just two main players create a cozy relationship that maximises their profits at the expense of potential rivals – and, more importantly, consumers?
There have been reports of “ghost flights”, with Qantas admitting selling seats on flights it had already cancelled, and suggestions that the two major airlines hoarded take-off and landing slots to make it harder for would-be competitors to get a foothold.
Amid all this, it seems another company is ready to try where Rex, Bonza, and others – including Compass and Compass Mark II, and before that Ansett – failed.
Melbourne-based Koala Airlines says it will succeed by “carving out a unique niche that enhances the industry landscape” and not compete directly with Qantas and Virgin.
Time will tell whether Koala will take off and, if so, if it can last the distance.
In the international arena, having failed to get approval for further flights to and from Australia, Qatar Airways is seeking Federal Government go-ahead to take a 25% stake in Virgin, which plans to offer flights to the Middle East gateway of Doha from July next year.
These moves might mean more choice and, perhaps, lower ticket prices for consumers in the future.
Perhaps more significantly for customers is the establishment of the Aviation Industry Ombuds Scheme as recommended in a government White Paper released in late August.
The report suggests the establishment of a Charter of Rights which, among other things, will entitle passengers to a cash refund if flights are cancelled or unreasonably delayed.
Airlines would also be required to “show cause” as to why a service has been cancelled or delayed.
The ombudsperson created under the scheme would handle customer complaints, publish reports on the conduct of airlines and airports, and make recommendations to the Federal Government to protect consumer rights in the sector.
Australian Traveller reports that the initiative is “expected to improve airline performance by encouraging compliance with stricter service standards and increasing transparency in how airlines handle delays and cancellations”.
Whether this scrutiny will lead to lower ticket prices and/or open the door to further competition remains to be seen.
Initial signs are not good, with Qantas pre-empting the report, saying in December last year that having to pay compensation for delays would lead to higher airfares.
Related reading: Australian Traveller, News.com.au, ABC
