Qantas and Australia's skies clouded by soaring airfares, anti-competitive behaviour, and nepotism

The skies above Australia have long symbolised freedom, exploration, and connection. Yet, in recent years, these skies have become shrouded in clouds of anti-competitive behaviour, sky-high airfares, and nepotism, threatening the very essence of Australia's aviation industry.

Once a source of national pride, Qantas, the national carrier, has evolved into an emblem of profit-driven opportunism, leaving millions of Australians to bear the brunt of exorbitant fares and diminished customer service.

Amidst this disheartening scenario, the questionable ties between Qantas' Chief Executive Officer and senior Government figures further highlight the alarming extent to which vested interests have taken precedence over the well-being of the nation's people.

As airfares soar to unprecedented heights – this week’s Qantas financial results indicate that average airfares are 38% higher than before the COVID-19 pandemic and 30% higher than last year – Australians face the harsh reality of exorbitant travel costs.

The Qantas Group, once renowned for its commitment to serving the public, now reaps super-profit margins at the expense of both domestic and international travellers.

The COVID-19 pandemic only exacerbated the issue, with the airline industry's challenges providing Qantas with a reason to increase prices while reducing the quality of service.

Despite the plight of Australia’s citizens, the Australian Government's actions have perplexingly favoured Qantas' interests. After taxpayers extended $2.7 billion to Qantas during the COVID-19 pandemic, [NP1] the airline returned the favour by keeping the money, sacking 12.5 per cent of its workforce and jacking up airfares to unprecedented levels.

Qantas claims it is unable to provide pre-COVID levels of international capacity for at least another year, due to a lack of aircraft. But let's keep in mind its CEO, who has been at the helm for 15 years, has had every chance to buy planes but has passed that expensive and profit-crushing job to the next CEO. In the meantime, unsurprisingly, Qantas has just reported colossal profit margins.

Earlier this year, relief appeared in sight. Middle Eastern airline, Qatar Airways applied to operate an additional 28 weekly flights between Doha in Qatar and Sydney and Melbourne. Notably, Qatar was one of only two airlines that never stopped repatriating Australians during the pandemic. The Albanese Government’s Transport Minister, Catherine King, however, refused that application, raising questions about the extent of Qantas' potential influence over governmental decisions.

As has been reported elsewhere, Catherine King has demonstrated a pattern of decisions favouring Qantas, arguably at the expense of democracy, equity and impartiality. In June 2020, then-Treasurer Josh Frydenberg directed our competition watchdog, the Australian Competition and Consumer Commission (ACCC), to monitor and report on the domestic airline industry for three years. This year ACCC Chair Gina Cass-Gottlieb, requested funding from the Government to continue that work, given “a lack of effective competition... has resulted in higher airfares and poorer service”. Catherine King refused that funding.

Most recently, the ACCC told The Australian Financial Review that Qantas was the most complained about company in Australia in the year to 30 June 2023.

King’s rejection of Qatar’s application, originally on the back of an inexplicable conflation of air rights and a detestable but unrelated incident involving the Qatar police, showcases the Government's eagerness to accommodate Qantas' wishes over the interests of Australian consumers and the broader economy.

As an aside, more recently, King has cited ‘decarbonising the transport sector’ as her reason for blocking Qatar Airways.

How can Qantas have such a stranglehold of influence on a Government that is meant to represent those who voted it into power?

Qantas' anti-competitive behaviour and its consequences

Qantas’ anti-competitive behaviour is evident in that stifling of competition. The Qantas-Emirates alliance, for instance, effectively operates as a single entity, reaping the benefits of reduced competition and monopolistic pricing. The alarming fact that Qantas and Emirates boast over 50% market share on flights between Australia and the UK, and more than 30% market share between Australia and Europe underscores the dire need for increased competition in the aviation sector.

The adverse impact of Qantas' anti-competitive practices on airfares cannot be understated. By stifling competition, Qantas maintains the ability to set exorbitant prices that Australian travellers are forced to pay. These practices not only lead to record-high airfares but also deter potential tourists from visiting Australia due to inflated travel costs.

According to a leading investment blog, MacroBusiness, “Catherine King recently argued the additional Qatar flights were not in Australia’s “national interest” and would have reduced jobs for Australians – a claim rejected by the tourism and aviation industries.”

While some argue safeguarding Qantas protects jobs, they forget the job cuts Qantas has already made. They also ignore the positive benefits more affordable travel would have on our skills shortage and revenue for the tourism sector. Just ask the storekeepers in the tourist-reliant town of Kuranda, Queensland, for example.

In Qantas’ latest results, analysts noted; “Qantas expects to recover the cost of recent increases in A$ jet fuel by altering capacity, notably domestic capacity for 1H24 has been cut to 103% from 108% of pre-COVID.” In other words, not only does Qantas defend egregious airfares by leaning on our Government to block reasonable competition, but it also cuts its own capacity after doing so.

Nepotism and cronyism: Qantas and the Prime Minister

The widely reported close relationship between Qantas' CEO Alan Joyce and Prime Minister Anthony Albanese raises eyebrows and fuels concerns of nepotism and cronyism. The alleged granting of a privileged membership to the Qantas Chairman's Lounge for the Prime Minister's 23-year-old son perhaps epitomises the intertwining of political power and corporate favours. This seemingly small gesture may cast a shadow on the Prime Minister's integrity. It also underscores the lengths to which Qantas may have infiltrated the highest echelons of power, to reinforce its self-interest.

Furthermore, the Prime Minister's apparent unswerving support for Qantas, despite its questionable practices, raises concerns about whether public officials are truly representing the interests of the Australian people or catering to the demands of corporate entities who can in turn, grant them favours. The Qantas-Emirates alliance further highlights the seemingly unbreakable bond between political power and corporate interests.

Australia's aviation industry is at a crossroads, thanks in part to the release of Qantas’ latest annual profit announcement. Inflated airfares and anti-competitive behaviour are reflected in the company’s record results. The actions of Qantas, under the helm of its CEO, coupled with the alarming alignment of political and corporate interests, have led to a scenario where the interests of Australians at least appear to be sacrificed for the benefit of a select few.

The future vision for Australia's skies should be one of fairness, competition, and accessibility, where air travel remains a source of pride and connection for all Australians. It is high time the Government re-evaluates its relationship with Qantas and takes meaningful steps to ensure a transparent and equitable aviation landscape.