The spat between Australia’s major airlines and airports continues, with both sides accusing one another of hiking domestic ticket prices.
Qantas and Virgin Australia are calling on the federal government to intervene on their side by urging Treasurer Josh Frydenberg to regulate airports over excessive landing fees, according to ABC News.
This comes after The Australian Airports Association (AAA) accused airlines of playing with supply and boosting airfare prices, citing data from the Bureau of Infrastructure, Transport and Regional Economics (BITRE) that revealed domestic fares have increased more than three times the rate of inflation.
Qantas Group’s Alan Joyce – Australia’s highest paid CEO for 2018 – and Virgin Australia CEO Paul Scurrah are expected to use the National Press Club event on Wednesday to repeat calls for airport regulation.
Both major airlines argue that airports are to blame for higher domestic ticket prices as a result of increased fees placed on carriers. However, according to the Australian Associated Press (AAP), the Productivity Commission says airport charges make up a small portion of airfares and have little impact on the price of a ticket.
The Australian Competition and Consumer Commission (ACCC) is in support of arbitration. Its chairman Rod Sims told ABC Radio National on Tuesday, “We’ve been putting the view for some time at the ACCC that you’ve got airports, which are effectively unregulated monopolies. We’ve been proposing for some time a negotiate-arbitrate regime.”
“It’s a unicorn,” Joyce said during an an interview this week on ABC’s AM.
“There shouldn’t be an unregulated revenue stream in a monopoly environment.
“There is in this case, and that’s bad for consumers.”
Scurrah said airports have charged his airline an extra $109 million over the last three years.
“So it makes it almost impossible for us to keep discounting airfares where we’re absorbing those charges going through,” he told AM.
According to multiple media reports, neither of the airlines has guaranteed savings will be passed on to consumers; however, Joyce said the “intent is this will be passed onto consumers – that’s what we want”.
The AAA said on Wednesday the push for regulation by airlines would “decrease competition” and “leave passengers with less choice” – a statement Joyce indirectly refuted when he told ABC News competition between the airlines would mean lower costs, which should lead to lower prices.
The aviation body added that “more than $20 billion of new investment in Australian airports” is at risk as airlines continue their “discredited” campaign.
Major airport CEOs have warned against changing a system that has delivered a better deal for passengers and unlocked billions of dollars in private investment.
“The current system is working – Qantas is delivering record profits, airports are investing heavily, and customers have more choice than ever before,” Sydney Airport boss Geoff Culbert said.
“Sydney Airport invests more than a million dollars a day to expand the capacity of the airport and improve services. We don’t need further red tape and regulation which will put that at risk.”
The Transport Workers’ Union (TWU) is in support of airlines’ claims that airports are “financially squeezing the aviation industry”, but said airlines must also be held to account.
“We would like to see a system of regulation so that both airports and airlines at the top are held responsible for conditions for workers,” TWU national secretary Michael Kaine said in a statement.