The Australian Competition and Consumer Commission (ACCC) has been directed by the Federal Government to resume monitoring domestic air passenger services in an effort to improve the sector’s competitiveness.
Under the Competition and Consumer Act 2010, the ACCC is required to monitor prices, costs and profits in the domestic air passenger sector.
The competition watchdog will start monitoring by the end of 2023 for a period of three years, with quarterly reporting intervals. The previous monitoring period ran from July 2020 to June 2023.
An 18 October release says the resumption of ACCC monitoring will help to ensure domestic travellers get a safe, sustainable and efficient aviation sector that provides a high standard of service, good prices and better consumer protections. It says a more competitive airline industry will put downward pressure on prices and deliver more choice.
“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,” the statement reads.
The 12 quarterly reports submitted under the previous three-year period found declining service standards and higher prices, but were not acted on. This time, the government says, it will use ACCC monitoring to help inform the Aviation White Paper currently being drafted to set the policy direction for the sector to 2050.
“We will ensure healthy competition plays a key role in shaping the future of the sector,” it says.
ACT Independent Senator David Pocock welcomed the move after calling for the resumption of monitoring.
“We have a dire lack of competition in Australia’s airline industry but also more broadly across the economy,” he said. “I welcome all measures that will enhance transparency and competition and thank the Government for agreeing to reinstate this monitoring.”
Senator Pocock said Canberrans were amongst the worst affected by a lack of competition in the industry, and highlighted the fact that Canberra to Sydney and Sydney to Canberra flights were the most and fifth-most cancelled routes in the country respectively.
“The duopoly market structure of the domestic airline industry has made it one of the most highly concentrated industries in Australia, other than natural monopolies,” he said.
“The lack of effective competition over the last decade has resulted in underwhelming outcomes for consumers in terms of airfares, reliability of services and customer service.”
The timing of the ACCC monitoring announcement is somewhat ironic in the wake of the Government’s refusal to grant additional access to the Australian market to Qatar Airways, a move which most analysts say will result in greater choice for passengers and reduced international airfares.