Australians could end up paying more for airfares with Qantas now having 90 per cent of the regional airline market.
While flights between Sydney and Melbourne are now cheap as competition heats up, Qantas services from regional coastal towns to Byron Bay are expensive with some flights costing more than $700.
Qantas chief executive Alan Joyce in October bragged the flying kangaroo’s market share would surge as its rival Virgin Australia downsized to survive the Covid pandemic.
‘In fact, over time, our domestic market share is likely to increase organically from around 60 per cent to around 70 per cent, as our main competitor changes its strategy,’ he told shareholders.
As of December 2020, Qantas’s market share across Australia had grown to 74 per cent – even better than the 70 per cent figure Mr Joyce boasted about just five months ago, an Australian Competition and Consumer Commission report revealed on Wednesday.
Australians could end up paying more for airfares with Qantas now having up to 90 per cent of the regional airline market
In the regional-to-regional destinations space, Qantas has a 90 per cent market share.
Smaller rival Rex has diverted resources to the more lucrative Sydney to Melbourne route, leaving Qantas with a landslide slice of services outside of the capital cities.
Rex accused Qantas a predatory behaviour as the flying kangaroo carrier introduced new regional services that weren’t its traditional domain.
The competition regulator acknowledged this was an issue that needed to be monitored.
‘The ACCC will continue to monitor the market and, in particular, as the industry stabilises, we will be alert to any conduct that may raise competition concerns,’ it said.
Illustrating this, a Qantas flight between the NSW north coast cities of Port Macquarie and Ballina near Byron Bay, via a loop back to Sydney, costs $647.
Rival Rex offers a $621 flight but travellers have to stay overnight in Sydney, with Qantas offering a lot more services simply because Rex doesn’t have access to as many terminals at Sydney airport.
This was something the ACCC pointed out, after Rex started Sydney to Melbourne flights in March.
While flights between Sydney and Melbourne are now cheap as competition heats up, Qantas services from regional towns to Byron Bay are expensive with some flights costing more $700
‘While historically it has been difficult for a new entrant to compete long-term against incumbents on the major city routes, Rex is building from a large and established regional network it has been operating since 2002,’ it said.
‘A key issue in Rex’s expansion will be its ability to access future take-off and landing slots at Sydney Airport.’
Flying from Merimbula on the NSW south coast to Ballina costs $716.
Services from capital cities to regional areas is also expensive.
A Qantas flight from Brisbane to Mount Isa service costs $971.
A Qantas flight from Sydney to Maroochydore on the Sunshine Coast is $283.
New South Wales Deputy Premier John Barilaro, who is also Nationals leader, in February blasted Qantas for encroaching into regional routes, causing Rex to divert resources to more lucrative services between capital cities instead of regional towns and centres.
Qantas chief executive Alan Joyce in October bragged the flying kangaroo’s market share would surge as its rival Virgin Australia downsized to survive the Covid pandemic
New South Wales Deputy Premier John Barilaro, who is also Nationals leader, in February blasted Qantas for encroaching into regional routes, causing Rex to divert resources to more lucrative services between capital cities instead of regional towns and centres
‘Qantas, the self-proclaimed “Spirit of Australia”, is the first to pull on our patriotic heartstrings but in the same breath sabotages a rival airline, failing to consider the long-term impact on regional communities who depend on vital air services for travel, freight and connectivity,’ he said in February.
Mr Barilaro hinted Qantas was out to kill its competitor in regional areas.
‘Qantas seems motivated only by its own narrow commercial interest, not what is in the best interest of the community,’ he said.
For now, the travelling public has benefited as new carrier Rex offered $49 flights on the Melbourne to Sydney route.
‘Rex’s entry has created further competition on Australia’s busiest route, Melbourne–Sydney, and consumers have already benefitted from lower airfares,’ the ACCC said.
Virgin matched the price while Jetstar, the budget subsidiary of Qantas, offered $29 fares.
Rex will soon fly to Adelaide, Canberra and the Gold Coast.
From April 1, Australians will be able to buy 800,000 half-price airline tickets to 13 popular destinations including the Gold Coast and the Sunshine Coast, and more out-of-the way places such as Alice Springs, Kangaroo Island and Broome.
Travellers will be required to travel interstate – something out of reach for months because of border closures – as part of the $1.2billion federal government subsidy package for the Covid-hit aviation and tourism sectors.
Rex will soon fly to Adelaide, Canberra and the Gold Coast (Surfers Paradise pictured). From April 1, Australians will be able to buy 800,000 half-price airline tickets to 13 popular destinations including the Gold Coast and the Sunshine Coast, and more out-of-the way places such as Alice Springs, Kangaroo Island and Broome
Fat Prophets head of research Greg Smith warned that after the taxpayer subsidies ended on July 31, domestic and international airfares could surge by 20 per cent on pre-Covid levels.
This is because the scheme will likely allow Qantas to claw back revenue lost during the pandemic, giving it a greater market dominance over its rivals – and putting it in a better position to increase prices later.
‘I don’t think there’s going to be a price war, if anything it’s going to go the other way,’ Mr Smith told Daily Mail Australia.
‘You could expect ticket prices to sort of go up, potentially 10 to 20 per cent – there’s going to be a lot of pent-up demand.’
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