Government Covering up for Airline Duopoly

I spoke in support of the Competition and Consumer Amendment (Continuing ACCC Monitoring of Domestic Airline Competition Bill 2023) introduced by the Coalition.

The Morrison Government first put airline monitoring in place in June 2020. For some reason, the Albanese Government decided not to continue this monitoring. Yet, the ACCC’s own reporting has identified ongoing issues due to the lack of competition in the industry — issues with the quality of service, running behind schedule and cancelled flights are becoming far more common.

Qantas and Virgin are failing to keep to expected standards of operation while exploiting their market power to protect their market share. This is crony capitalism and indefensible. Only healthy competition will ensure the airlines maintain their standards.

We have one flag, we are one community and we are one nation. Restoring and defending competition in oligopolistic markets is a government obligation, an obligation that One Nation will work to ensure the government fulfils, for the benefit of airline passengers and the whole country.

Transcript

As a servant to the many different people who make up our one Queensland community, I speak to the Competition and Consumer Amendment (Continuing ACCC Monitoring of Domestic Airline Competition) Bill 2023, and I commend Senators McKenzie and Smith for advancing this bill. The bill amends the Competition and Consumer Act 2010 to direct the Australian Competition and Consumer Commission, the ACCC, to continue its monitoring program of prices, costs and profits in the Australian domestic airline industry. 

The Morrison government initiated this monitoring on 19 June 2020, and it sunset in June this year. The Albanese government decided not to continue the monitoring. Perhaps former Qantas CEO Alan Joyce asked the Prime Minister in one of their many meetings for a favour, a favour for Alan Joyce and his masters, Qantas’s shareholders BlackRock, Vanguard, State Street, Goldman Sachs and their cronies. All love monopolies and oligopolies! This Labor government seems to have opened more doors for captains of industry than it does for everyday Australians. 

The ACCC’s Airline competition in Australia report from June 2023 identified ongoing issues connected to insufficient competition within Australia’s domestic airline industry. The lack of competition has led to higher airfares and a decline in service quality. Cancellations have increased from one per cent before COVID to six per cent now. On-time running has fallen from a high of 92 per cent before COVID to just 70 per cent now, which, admittedly, is an improvement on the 64 per cent Qantas and Virgin were managing just a few months ago. By any measure, this poor performance is unacceptable. I remind people that the word ‘Joyced’ has entered the Australian vernacular to describe having one’s travel plans shafted due to Qantas’s incompetence, arrogance and greed. 

The reason Qantas and Virgin are still occupying a position of total market dominance—94 per cent of the market—is that they don’t have any competition. I recall being in a hearing on industrial relations in Rockhampton recently with Qantas government relations people sitting in front of us. I expressed my safety concerns because Qantas’s culture has deteriorated despite having outstanding staff at all levels, from pilots to ground staff to stewards to bookings clerks, all thoroughly competent, committed people. That deterioration has come from the top. The staff are wonderful; the leadership is poor. 

Look at the ‘yes’ campaign livery of an airliner—a 60-metre flying billboard costing hundreds of thousands of dollars to paint the ‘yes’ livery. That shows the arrogance of the Qantas executives because they know that they have domination of the market. They have market control, and market control brings arrogance. They’re also pushing for short-term gains for executive management under their compensation schemes, and then the former executive, Alan Joyce, serves the government politically, in many ways, and he’s done that repeatedly. My big concern is that, when the culture deteriorates—from Qantas’s fine culture of a few decades ago—safety can unwittingly be compromised. That is a vital concern for me. I’ll point out that it’s not regulation that creates a customer focused operation; it’s a competitor running a customer focused operation. 

James Strong did a marvellous job at Qantas—and TAA—before it was privatised. Short of having another wonderful executive come along, it is a competitor running a customer focused operation that creates a customer focused operation and will restore Qantas and Virgin. Free market competition will deliver the lowest price with the highest service and safety every time—if it is allowed to! Sadly, Australia is a small market, and many industries have, over time, become oligopolies. Grocery retailing is another example of a market gone bad into an oligopoly.  

Bonza airlines to took 14 years to get in the air over Australia because of our airline industry’s barriers to entry. Six months after their first flight, the Albanese government terminated the ACCC project that helped Bonza finally get into the air in the first place. Perhaps the final ACCC report from June spooked the government’s big business mates, Blackrock, Vanguard, State Street, Goldman Sachs and their cronies. That final ACCC report found that, while the emergence of small carriers has opened possibilities for increased competition in the domestic airline sector, these airlines would need significant growth to genuinely challenge the dominance of Australia’s largest two carriers. There’s no real competition, even with Bonza in. Restrictions remain favourable to Qantas and Virgin to protect them from direct market competition and force the Australian flying public, the consumers, to pay more than they need to. 

Over the past 20 years, 90 per cent or more of domestic passengers have opted to fly with Australia’s two largest carriers. As of April 2023, these two airline conglomerates accounted for 94 per cent of all domestic passengers. Former Qantas Group executive and Jetstar chief Jayne Hrdlicka is now head of Virgin. So it’s a nice, tidy little cabal. They force regional flyers to pay exorbitant fares. Regions are the bedrock of Australia, and yet we’re asking them to support a monopoly. This bill largely replicates the previous direction. Monitoring will take into consideration the need for commercial confidentiality. The ACCC must publish each report on the website, and the minister must cause the report to be tabled in parliament. In the House Standing Committee on Economics hearing into promoting economic competition in June 2023 Tim Jordan, the Chief Executive Officer of Bonza Aviation, made this statement: 

… the path was lengthy. This project took from late 2009 until early 2023 to come to fruition. That tells you the barriers to entry in Australia— 

14 years— 

It is a sad indictment of the existing duopolistic environment that, although we would have very positive conversations with potential Australian investors, they would conclude— 

‘they’ being the investors— 

‘This sounds great, and we believe in the scale of the opportunity, but unfortunately the incumbents will not allow you to prosper.’ That is a sad indictment of the competitive nature of this market segment. 

I feel Mr Jordan’s pain and the flying public’s pain. 

I know those proposing a new Australian steel industry in North Queensland and northern Western Australia are, despite promising news for the project, hearing exactly the same thing from some investors. The sums add up for an Australian steel industry, adding tens of thousands of breadwinner jobs and national security, yet government incompetence and the woke agenda means these companies will consider investing in foreign markets instead. The actions of the Albanese government in refusing to extend the monitoring are another example of a government that has no clue how to create real jobs and how to lower prices for everyday Australians—at a time of high inflation, high cost of living and high energy prices: stick it to the Australian consumer. 

Mr Jordan went on to say: 

Going back to your point about the barriers to entry, when you have constrained slots— 

That’s the airport gates— 

and other entry issues, such as access to a choice of suppliers, it slows down growth and the ability to accelerate and achieve economic efficiencies so as to continue to be viable. 

The ACCC has much work to do here. Qantas and Virgin must not be allowed to exploit their market power to protect their market share in a manner that is legally indefensible and thereby force Bonza to fail. Bonza must be allowed access to airport gates, access to maintenance shops and access to suppliers at fair market price. Anything else is crony capitalism. 

For those who have been ‘Joyced’—shovelled off to a hotel in the middle of the night instead of sleeping in your bed, had luggage disappear and later return damaged, or missed international connections and been told, ‘Not Qantas’s problem’—no-one could argue we don’t need more competition. No-one could argue that increased competition in the airline industry will lead to increased efficiencies right across the country. Bonza raises the hope of keeping these bastards honest and, at a time of high cost of living and inflation, giving consumers relief. It’s the ACCC’s job to give Bonza every opportunity to do just that. 

I thank Senators Dean Smith and McKenzie for their bill, which One Nation will be supporting. We have one flag, we are one community, we are one nation. Restoring and defending competition in oligopolistic markets is a government obligation, an obligation that One Nation will work to ensure the government fulfils for the benefit of airline passengers and the whole country.