‘Funny relationship’ between government and Qantas may cost Australians

Australia’s peak business body has estimated the Albanese government’s decision to block Qatar Airways request for increased capacity at Australia’s three biggest airports will cost the tourism industry hundreds of millions of dollars and keep the price of flying to and from Europe “higher for longer”.

John Hart, Executive Chair of Tourism at the Australian Chamber of Commerce and Industry, told The New Daily that it is estimated the rejection of Qatar’s request will cost the tourism industry $788 million.

“It’s calculated on the basis of the number of additional seats and the average spend of tourists arriving internationally,” he said.

“That’s the known effect, but we’ve got the unknown effect of whether this is a precedent that’s going to lead to further rejections.”

On Monday, Qantas CEO Alan Joyce argued allowing Qatar to increase flights would create “market distortion,” but Mr Hart said prices along the route will remain higher for longer without increased capacity.

“Right now, there is absolutely no reason why we shouldn’t have additional capacity,” he said.

“We are in a situation where we are significantly down on capacity in and out of Europe, and we need to do everything we can to get it back as quickly as we can.”

Jayne Hrdlicka, CEO of Virgin Australia, suggested allowing the flights – from which her company would benefit due to a partnership with Qatar Airways – would cut fares on the route by up to 40 per cent, although her estimated hit to the tourism industry fell hundreds of millions of dollars short of Mr Hart’s.

Jayne Hrdlicka, CEO of Virgin Australia, suggested the extra capacity would cut prices by up to 40 per cent. Photo: Queensland University of Technology

Protecting competition

Gui Lohmann, a researcher at Griffith University, said the government’s decision to reject Qatar’s request was based on the airline reaching the threshold allocated to it for frequency of flights.

“Qatar can fly to airports like Darwin, Broome or Cairns, because those airports aren’t at capacity,” he said.

“The government isn’t pulling competition, there’s a lot of airlines increasing capacity.”

Qatar Airways, due to being a state-owned airline, has significant access to cheap fuel and subsidised opportunities unavailable to other carriers.

Professor Lohmann said the government is signalling that previous caps on frequency and capacity will remain in place to protect market competition on “the kangaroo route”.

“It’s basically insisting and enforcing the current constraint that it has put in for a single airline to operate, in a way that no airline can come here and suddenly flood the market with seats and frequency,” Professor Lohmann said.

“If Qatar really wants to operate in Australia, they have a lot of routes that they can do that.”

A special relationship

Mr Hart said the decision wasn’t about discouraging an anti-competitive situation, and he suspects it was to give Qantas special treatment.

“The government hasn’t said that is the case. They also haven’t said why they think this is in the national interest,” he said.

“In absent of that detail, we can only speculate to what’s motivating it.”

Minister for Transport Catherine King said the decision was made in the national interest, but has not publicised the reasons for denying Qatar’s application for more flights from Europe to Sydney, Melbourne and Brisbane.

Transport Minister Catherine King is yet to reveal why blocking Qatar is in the national interest. Photo: AAP

Professor Lohmann said Australia has a special relationship with Qantas due to legislation banning complete foreign ownership of the company.

“There’s a funny relationship between Labor and Qantas in many ways,” he said.

“We need to keep that in true perspective of the broad desire for keeping a healthy competition in the country.”

He said despite cancellation and delay issues damaging Qantas’s standing in the community, it is still in the national interest to protect the airline.

“It hasn’t been an easy return for the industry in general,” Professor Lohmann said.

“Australia has a particular relationship with Qantas and we should not forget about that.”

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