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26 September, 2023

“Preferential treatment”: Virgin claims government has hindered its ability to compete with Qantas

Virgin Australia has made a submission in a parliamentary inquiry where it claimed that the government’s blocking of Qatar Airways has harmed its ability to compete with Qantas.

The inquiry was called to examine why the government refused Qatar Airways’ application to up its capacity into Australia at a time when airfares are well above pre-pandemic levels.

Via its partnership with Qatar Airways, Etihad and Singapore Airlines, Virgin said that it holds a 23 per cent share of the Europe and Middle East market. The airline claims that if Qatar was allowed to double its capacity to four major cities in Australia, this share would have increased up to 27 per cent.

“In declining [Qatar]’s request, the federal government has negatively impacted the competitive position of Virgin Australia in favour of our far larger rival,” the submission reads.

“In the face of the compelling economic argument in favour of 28 additional services each week from Qatar Airways, including the clear benefit it provides to improving domestic aviation competitiveness, the decision to decline the … request, let alone to not even open negotiations with Qatar, creates a perception that [Qantas] is receiving preferential treatment.”

The government has been accused of being in cahoots with Qantas after Anthony Albanese’s son received membership for the highly exclusive Chairman’s Lounge.

The head of Flight Centre, Graham ‘Skroo’ Turner, believes that the blocking, while given by transport minister Catherine King, could have come from Albanese himself.

On Qantas’ alleged anti-competitive behaviour, Virgin said it was quite clear why the Qantas Group would look to block Qatar Airways’ expansion.

“That’s what competitors do, particularly when Qantas Group’s record profit in FY23 is underpinned by record breaking international earnings,” the airline’s submission read.

“Those earnings before interest and tax (EBIT) over the six months to June 2023 were more than double Qantas’ previous record (6 months to June 2015). And the level of income that Qantas generated from its international operations in FY23, well beyond pre-COVID levels, can largely be attributed to abnormally high airfares driven by the sluggish return of international capacity in most of their key markets.”

At the inquiry last week, the CEO of the Australian Travel Industry Association (ATIA), Dean Long, and Skroo argued that Australia needs more open skies agreements as high airfares and instances such as the blocking of Qatar hinder the recovering travel industry.

Long told the senate a “revolution rather than a recalibration of Australia’s aviation industry is needed to ensure consumers are better supported.”

“Until consumers are at the heart of decisions being made about which airlines fly in and out of Australia, and it’s not just about the impact on airlines, we won’t see improvement. The current approach was born in 1944 and it’s frankly outdated.”

The senate inquiry will meet again tomorrow and present a final report by 9 October.

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Email the Travel Weekly team at traveldesk@travelweekly.com.au

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