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The Guardian - AU
The Guardian - AU
Elias Visontay Transport and urban affairs reporter

‘Paying too much’: calls for ongoing inquiry to monitor airlines over price-gouging fears

The Virgin Australia Holdings Ltd. logo, left, and Qantas Airways Ltd. logo are displayed on the tails of aircraft at Sydney Airport in Sydney
The ACCC’s program monitoring Australian airlines will wrap up at the end of June but former watchdog chief Rod Sims has said a broader ongoing inquiry ‘would be very valuable to the industry’. Photograph: Bloomberg/Getty Images

A key government program monitoring Australian airlines’ behaviour is ending just as carriers face claims they are overcharging passengers, prompting consumer and aviation figures to call for a dedicated and ongoing inquiry to probe the industry.

Calls for greater scrutiny from Australian Airports Association chief executive, James Goodwin, and former competition tsar Rod Sims come as the Australian Competition and Consumer Commission’s (ACCC) domestic aviation monitoring taskforce expires at the end of June.

Beginning in June 2020, the Morrison government directed the ACCC to monitor the domestic industry for anti-competitive behaviour at a time of crisis, following Virgin Australia entering administration and the loss of budget carrier Tiger, as well as broader disruptions from pandemic border closures threatening other airlines operations.

However, as the three-year term of the monitoring direction entered its final year, the quarterly reports released by the watchdog have also come to comment on international operations and examine more pressing consumer issues, including putting airlines on notice over concerns of price-gouging.

Airlines were compelled to hand over detailed operating data they otherwise would not share, which has allowed insights into revenue-per-passenger figures and a more behind-the-scenes look at an industry where big players such as Qantas are posting record multibillion-dollar profits as air fares remain stubbornly high.

While departmental reporting of aviation statistics such as on-time performances are set to continue, the ACCC will no longer be able to request more detailed data from carriers, and the government will no longer provide extra resources for the level of dedicated monitoring the industry has been subject to for the past three years.

Now, there are prominent calls for a mandated ongoing inquiry that would capture even more data to call out anti-competitive behaviour such as landing-slot hoarding.

Goodwin is also pleading for the government to continue some form of airline monitoring program. He told Guardian Australia: “Consumers are paying too much for airline tickets, that’s clear.”

Goodwin noted how the price of jet fuel had plunged and airport charges had remained steady but airlines did not appear to be passing savings on to consumers.

“The cost of providing aviation passenger services hasn’t increased commensurately. The increase in fares is unrelated to any increased airport costs, plus jet fuel has come down in cost,” he said.

“Yes, the circumstances for monitoring have changed somewhat, but there are still reasons to keep it going, and we would be keen to see a form of airline monitoring that is fit for purpose, which can also look at things such as cancellation data.”

Sims, who was ACCC chair when the monitoring task began, said while he is not surprised the government has not renewed the monitoring – in part due to the cost of the added resources – by ending the inquiry, airlines would now feel less scrutiny.

“All companies being monitored by the ACCC take very seriously what the monitoring results show and it can affect their behaviour on the margin, and they know that anything they do with pricing will be reported on and they need to have a good explanation,” he said.

“I understand the point people are making that it’s not a good time to be finishing [the monitoring] for aviation; it’s fair to say air fares are massively above what they used to be.”

Sims said that a broader, ongoing inquiry – whether led by the ACCC or another body with similar powers – “would be very valuable to the industry”.

He mentioned alleged slot hoarding at Sydney airport, where legislation caps the number of take-offs and landings, as one area that a renewed program could probe.

By capturing more in-depth data about cancellations, an inquiry could gather evidence as to whether larger airlines such as Qantas and Virgin are in fact scheduling more flights than they intend to run and cancelling some at the last minute – which can allow them to retain their slots for those flights and block competitors from accessing them.

“Absolutely we need better data about cancellations, whether it’s the ACCC or somebody else doing it. There are so many people who are accusing some airlines of hoarding slots. Whether they’re right or not, let’s get data to prove what is actually happening.

“These allegations of putting on more flights than they intend to run, it’s unhealthy to have allegations without somebody out there testing it and a healthy aviation market should have that sorted out.”

A spokesperson for the transport minister, Catherine King, said: “If the situation requires it, the Australian government will resume ACCC monitoring.”

An ACCC spokesperson said while its formal monitoring was ending, “we have developed a deep understanding of the airline industry and we will continue to use our enforcement powers to achieve compliance with the [Competition and Consumer] Act.”

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