ACCC eyes airlines as prices soar and service standards fall, with Jetstar a standout

New Jetstar CEO appointed as the carrier faces fresh accusations of leaving holidaymakers stranded overseas.

New Jetstar CEO appointed as the carrier faces fresh accusations of leaving holidaymakers stranded overseas. Photo: TND

The horror stories of stranded Jetstar passengers and continually cancelled flights come as data reveals Australians are experiencing the worst airline service standards on record and soaring airfares.

Airlines, including Australia’s largest carrier Qantas Group, are being investigated by the consumer watchdog after complaints about sub-par service standards since the end of COVID-19 lockdowns.

In a report published on Wednesday, the Australian Competition and Consumer Commission drew a line under thousands of reports about lost baggage and cancelled flights from frustrated travellers.

It revealed airline service standards (measured as on-time performance) tanked to a record low in July, despite the cheapest airfares soaring 56 per cent between April and August 2022.

ACCC chair Gina Cass-Gottlieb has put airlines on notice about service standards that are ‘‘well short of expectations’’ and even singled out Qantas in an interview with The Guardian, saying the airline didn’t do a ‘‘realistic assessment of how many flights they could serve’’.

“We expect that airlines will be honest and proactive in communicating to passengers the reasons why a flight is delayed or cancelled, how the consumer guarantees apply, and what other compensation they are entitled to,” Ms Cass-Gottlieb said.

The comments came amid reports that thousands of holidaymakers have been stranded in Bali after Qantas’s budget carrier Jetstar cancelled numerous flights from Indonesia, Japan and Thailand this month.

Frustrated customers reported being blindsided by the move, which Qantas Group has blamed on a series of engineering and maintenance problems.

Australians stranded after Jetstar groundings

Chaos at Jetstar

Data shows Australia’s entire aviation industry delivered sub-par service standards in recent months as travel demand picked up after COVID-19, but Jetstar is a standout.

The budget carrier cancelled 8.8 per cent of its flights in July, according to official figures, which was 37.5 per cent (or 2.4 percentage points) higher than the broader industry rate.

It was also behind many airlines overseas in the so-called on-time performance time in July, with analytics firm OAG ranking Jetstar Australia 120th out of 130 airlines globally.

Service standards for some customers worsened in the past week as Jetstar cancelled flights and stranded them overseas.

The airline stated repair and maintenance issues forced it to ground large parts of its international fleet, with supply chain delays making it difficult to source spare parts.

Aviation consultant and industry veteran Neil Hansford said one key issue facing Jetstar is that it invested in the “latest technology” planes for its long-haul flights, which are built using kevlar and not aluminium.

This made it more difficult to source spare parts needed for repairs and engineers with the expertise to do the job, he said.

“The unscheduled component [of the repairs] is more difficult because only certain people can repair the kevlar,” Mr Hansford said.

“If it was a traditional aircraft it would just be panel beating and patching.”

Mr Hansford said aircraft maker Boeing is also providing “terrible service” to airlines, because of a huge shortage of spare parts that are needed to repair planes.

Flyers pay more

The ACCC reported that the cheapest airfare on the market rose by 56 per cent between April and August, so customers are paying more for worse service.

It prompted the ACCC to reiterate the importance of airline competition in keeping fares low, after the former competition watchdog boss told The New Daily last week that he feared Qantas Group (which owns Jetstar) is now in an “extremely strong” position after COVID-19.

Source: ACCC (click to enlarge).

“After about 18 months of historically low airfares, the cost of domestic flying has risen sharply in response to strong demand, temporary capacity reductions and very high jet fuel prices,” Ms Cass-Gottlieb said.

“Discount economy airfares in August were at their highest point in almost two years.”

There are positive signs for competition across the industry though, with competitor airline Rex opening new routes over the past four months and competing aggressively with Qantas.

Budget carrier Bonza is expected to offer Australian services in September, the ACCC said in its report.

“Bonza’s entry onto contested routes will provide more choice and add competitive pressure on airfares,” the watchdog said.

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