Former Bonza CEO Tim Jordan has labelled a scarcity of airline competitors as “by far the biggest contributor” to excessive regional airfares.
In his submission to the Productiveness Fee’s inquiry into regional airfares and a uncommon public assertion since Bonza’s 2024 collapse, Jordan singled out the dominance of Qantas Group – and, to a lesser extent, Virgin Australia – as a significant component putting upward stress on fares.
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“Australian aviation is probably the most centralised and consequently the least aggressive of all main home aviation markets on this planet,” he stated.
“Greater than 98 per cent of the home market is managed by two airline teams, with the dominant Qantas Group roughly twice the market share of the Virgin group.
“Regional Australia is in an excellent worse place than that, with the Virgin group not taking part in lots of giant regional markets.
“Qantas successfully tolerates Virgin on home trunk markets and QantasLink tolerates Rex on regional trunk markets. Australian aviation and the Australian travelling public is essentially beholden to the Qantas group and their ongoing tolerance ranges.”
Whereas Jordan additionally cites components together with larger regional airport working prices, “efficient geographical monopolies” for regional airport operators, and lack of alternative in floor dealing with suppliers, he notes that “the truth for many giant regional centres is that they’ve Qantas Group service predominantly through QantasLink”.
“Within the largest trunk regional markets there may be additionally service supplied by Rex or in restricted circumstances service on Virgin (which is mostly operated by Alliance),” he stated.
“Nevertheless, there are additionally a variety of giant markets in extra of 100,000 annual prospects that simply have QantasLink service as we speak.”
In response to Jordan, the “present entrenched place of the Qantas group together with a Qantas-tolerated Virgin group drives a really unusual aviation final result for Australian shoppers”.
“Australia at the moment has a severely restricted route community and fares that do little to encourage and maximise financial or tourism progress,” he stated.
“All ranges of presidency must be encouraging additional and elevated competitors to vary the established order. It’s no doubt the one largest hurdle towards aviation progress in Australia.
“Sadly, the present market and extremely efficient energy of incumbents imply that altering the established order will get tougher as every airline challenger operates its final flight.”
Information from the Federal Authorities’s competitors taskforce in January 2024 had confirmed that including extra opponents on a route can dramatically slash airfares.
Dr Andrew Leigh, the Assistant Minister for Competitors, pointed to figures from the taskforce exhibiting that airfares common 39.6 cents per kilometre on routes with just one service, 28.2 cents on routes with two carriers, and 19.2 cents with three.
“In different phrases, the value per kilometre is halved when three opponents fly a route in contrast with the state of affairs when there may be solely a single monopoly airline. With 4 or 5 opponents, the value drops additional nonetheless,” he stated on the time.
Qantas declined to remark, however Australian Aviation understands it will likely be making its personal submission to the inquiry.
