ACCC: To monitor Australian domestic air passenger services & competition again

The Australian Competition and Consumer Commission (ACCC) is tasked with monitoring the competitive behaviour of passenger airlines in Australia again. The ACCC provided this role for three years ’til June this year. Its final report recommended that it be funded to continue that role.

The government initially said no. Then they said yes.

Senate Committee inquiry

The recent Senate Committee into the decision not to approve additional flights by Qatar Airways was largely a political exercise. But it did shine the light into a few dark corners. Apparently the Australian Government were not keen to continue monitoring of the airline industry by ACCC. The Australian government said it would not implement either the ACCCs recommendation or the Senate committee finding to continue monitoring. The Prime Minister even claimed that Australia had the most competitive aviation market, ‘bar none‘.

Political necessity can be an opinion changer!

Government backflip with triple pike on ACCC monitoring airlines

Essentially, the government has done a backflip, reinstating the monitoring that was done for the previous 3 years.

This is politics, so there is a political reason. The opposition was trying to get a motion passed to extend the Senate Select Committee on Commonwealth Bilateral Air Service Agreements focusing on the rejection of Qatar Airways to increas flights to Australia. They desperately want to question former Qantas CEO Alan Joyce about his contact with ministeers on the issue, when he returns from Ireland. It is speculated that to inhibit independent Senator Pocock from supporting the motion, the government has offered the extension of ACCC airline monitoring.

Senator David Pocock was active in the senate inquiry, asking for a range of information, including grilling Qantas on its support of competition, the number of politicians who were granted membership of the exclusive Chairman’s Lounge, and how many cabin upgrades they had received.

Qantas is outstanding, but not in a good way

Qantas was the only airline at the inquiry that opposed the continued monitoring of the industry by the ACCC. However, it did soften its position in a submission to the inquiry, which acknowledged that some sort of oversight might aid public confidence.

‘ACCC market scrutiny will help ensure airlines compete on their merits, bring to light any inappropriate market conduct should it occur, and provide continued transparency at a time when new and expanding airlines are still trying to establish themselves.’

Key areas will include the level of capacity the airlines are putting on each route as well as industry performance, including on cancellations and delays.

Media Release, The Hon Catherine King, Minister for Transport, Reional Development and Local Government

This is a sensible move by the Government and integrates well with the current Aviation White Paper process, which is ‘setting the policy direction for the sector out to 2050‘.

2PAXfly Takeout

The previous ACCC process did not find any airline behaving in an illegal anti-competitive manner. But, it did highlight the performance of airlines, lack of effective competition, and quantified delays and cancellations. It’s also thought to have laid the factual groundwork for evidence that Qantas continued to sell flights that had already been cancelled. And that led to the current prosecution by the ACCC of Qantas for essentially selling flights that it didn’t intend to fly. Likened to the ‘fees for no service’ findings of the recent Banking inquiry.

I’m really pleased the government has opted for this continued monitoring. Although the Department of Transport does some monitoring of delays and cancellations of flights as raw statistics, the ACCC monitoring is more complex and nuanced, focussing on competition rather than statistics.

If you want to get really nerdy, you can access the reports here and have a read. I have.