Australia’s Labor party government is under growing pressure to explain its rejection of Qatar’s application for an additional 28 weekly flights in Sydney, Melbourne, Brisbane and Perth, with the Coalition centring its question time attacks on the issue.
The prime minister initially told parliament he spoke to Virgin boss Jayne Hrdlicka about the application before a decision was made; he later clarified it was after Transport Minister Catherine King had blocked the flights. The decision to reject Qatar’s application has left Labor split amid calls from regulators, tourism bodies and the Queensland and West Australian state governments to reconsider in a bid to increase competition and drive down the cost of airfares. The decision will also face parliamentary scrutiny in Australia.
Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry, said blocking more Qatar flights would potentially cost the tourism industry up to $788mn of foregone revenue.
Hart had previously written to Australian Transport Minister Catherine King and said the decision to deny Qatar’s application to double its flights to Australia would have serious financial repercussions for the tourism industry. Hart also asked to meet with the government to explain the chamber’s concerns.
Flight between Australia and Europe tickets are currently over 60% more expensive than pre-pandemic. It now costs around £1,500 for a return flight to London in economy.
Travel agents, opposition politicians, state leaders, and tourism bodies have all raised concerns about the Australian government’s decision to reject Qatar Airways’ application for an additional 21 weekly flights to Australia, accusing the government of blocking additional Qatar long-haul flights to Australia “to protect Qantas” from the competition.
Australia’s national carrier, Qantas, objected to Qatar Airways’ application on the basis that it could “lead to the loss of Australian jobs”. Tourism organisations don’t share Qantas’ view, one telling me “the opposite is true, an increase in flights boosts the economy and our sector as a whole”.
Qantas boss Alan Joyce will now face a Senate inquiry over his discussions with the federal government in the lead up to a ruling that blocked competitor airlines, including Qatar Airways, from offering more flights. Joyce has also announced he will retire two months early amid a series of controversies that have tarnished the image of Australia’s national airline. He will step down on Wednesday, instead of the planned date in November, the airline said in a statement on Tuesday, after weeks of turbulence at the Australian carrier.
“In the last few weeks, the focus on Qantas and events of the past make it clear to me that the company needs to move ahead with its renewal as a priority,” Joyce said in a statement.
“The best thing I can do under these circumstances is to bring forward my retirement and hand over to Vanessa and the new management team now, knowing they will do an excellent job.”
Qantas has been under fire in recent weeks amid a series of controversies, including the main claim of its success in lobbying the Australian government to deny the bid by Qatar Airways to increase flights. Additionally, Joyce is under facing scrutiny for plans to let nearly $323mn of pandemic-era flight credits expire at the year’s end; and allegations that it sold tickets for more than 8,000 flights it knew had been cancelled.
Qantas last month posted an annual profit of $1.1bn but has seen its stock price fall by 13% since the start of August amid the negative publicity. The airline this week apologised for its service falling short of expectations and acknowledged that its reputation had taken a hit.
“The decision to deny the application has been estimated to cost the tourism industry up to $788mn,” The Australian Chamber of Commerce and Industry’s executive chairman said in a letter to the government. “This is significant revenue that the tourism industry will potentially miss out on at a time when they are rebuilding following the Covid-19 restrictions.”
Hart warned the government against making the bilateral air rights rejection a precedent for future applications from other governments. “If this decision sets a precedent for consideration of future applications, being that requests for additional flights will not be granted, the loss to the tourism industry will be grave. The growth of Australian tourism is a function of inbound and outbound air capacity, and any limitations on capacity stunt growth – not only through numbers of seats inbound but also through price competitiveness,” Hart said in the letter, also sent to Minister for Trade and Tourism Don Farrell.
The Sydney Airport CEO joined others in the Australian aviation sector calling for more international airline competition. Additional flights will lower the cost of international airfares (forcing down Qantas’ current sky-high fares, given its comfortable dominance of Australia-International long-haul market) and economists have said it would generate additional $500mn in tourism revenue, and over 2,000 jobs.
Virgin chief executive Jayne Hrdlicka said she was disappointed with the decision, particularly given international airfares remain 50 per cent higher than pre-Covid-19. Virgin has a code share arrangement with Qatar.
“We are deeply disappointed that our partner Qatar Airways is unable to expand its services to Australia,” she said, and doubled down on the carrier’s previous invitation to work with the government to resolve the issue between Australia and Qatar.
“Additional Qatar flights would have an immediate and tangible effect in reducing airfares between Australia and Europe, the Middle East and Africa. Qatar is in the unique position in the context of a constrained global supply of widebody aircraft, to be able to quickly make available 4 additional services per day to Australia,” Hrdlicka said.
An industry source told Australian media that “the refusal of additional air rights is essentially a free kick to Qantas, who are profitable but aren’t expanding much right now ... so this holds their competition back too”.
Lack of aviation competition reduces tourism and business and isn’t in line with global aviation sector visions of open skies and increased trade.
Melbourne Airport CEO Lorie Argus said last week that it was time for the Australian government to increase the number of open skies agreements with other countries to make it easier for foreign airlines to fly to Australia, given Qantas’ dominance of the Australian market.
The author is an aviation analyst. Twitter handle: @AlexInAir