Airfares may have dropped, but so has customer service: ACCC

The vertical stabilisers of a Qantas Boeing B737-838 plane, registration VH-VZQ, and a Virgin Australia Boeing B737-8FE plane, registration VH-VUZ, waiting at the northern end of the main runway of Sydney Kingsford-Smith Airport in preparation for departure. The Qantas plane is heading to Adelaide as flight QF741 and the Virgin plane is heading to Adelaide as flight VA428. In the background is another Virgin B737-8FE plane. This image was taken from Nigel Love Bridge, Mascot on a sunny afternoon on 3 December 2023.

The Australian Competition and Consumer Commission (ACCC) has found that while airfares have dropped as has the quality with flight cancellations and delays still well above the long-term average.

In its first report on domestic airline competition since the quarterly monitoring was reinstated at the end of last year, the ACCC found the average revenue per passenger was 13 per cent lower in December 2023 than a year prior, when adjusted for inflation. But with the fall in airfare, so did the service provided by the carriers.

ACCC chair Gina Cass-Gottlieb said it was tough to gauge whether this lacklustre service would continue over the coming months as supply chain issues and resourcing challenges continued to plague the aviation industry.

“We are conscious of the impact of poor reliability across all classes of passengers. It has been very disappointing for customers and there are many factors which cause it. We think we can say the industry is out of the recovery phase, but it’ll be interesting to see which of the changes [from pre-COVID-19] are permanent,” Cass-Gottlieb said on Tuesday.

To crack down on this level of service, Cass-Gottlieb suggested Qantas and Virgin should funnel their money into customer service initiatives.

“We do therefore see a financial capacity to have more investment in factors such as numbers of pilots, pilot training and aspects that are seen to be contributing factors to poor reliability measures,” Cass-Gottlieb said.

QantasLink and Virgin planes (iStock/Ryan Fletcher)

In the ACCC’s report, it highlighted that the rate of cancellations has been above the long-term average of two per cent and the rate of delays was approximately 35 per cent, well above the long-term average of 19 per cent.

Bonza cancelled nearly 20 per cent of its flights in December, amid regulatory approval issues that plagued the airline, while Virgin Australia cancelled eight per cent, Jetstar axed six per cent, Qantas cancelled four per cent and Rex only cancelled one per cent.

Rex recently extended its capacity drop as it faces resourcing and supply chain issues, criticising phantom flights in the process.

A Qantas spokesperson said that the group was focused on improving its services and on-time performance across both carriers.

“Qantas and Jetstar have worked hard to reduce delays and cancellations, which we know frustrate our customers,” the spokesman said. “While our reliability has improved, we know there is still more work to do.”

The Qantas and Virgin duopoly in Australia currently operates 91 per cent of the flights in Australia, with Qantas group operating approximately 60 per cent.

(Featured Image: Qantas Boeing B737-838 plane and a Virgin Australia Boeing B737-8FE – iStock/SCM Jeans)

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accc australian competition and consumer commission Bonza jetstar qantas rex virgin australia