In recent weeks, the Australian aviation industry has been abuzz with discussions about a potential split between Qantas and its budget subsidiary, Jetstar. This debate was ignited by a proposal from Shadow Transport Minister Bridget McKenzie, who suggested that the government could introduce aviation break-up powers to address anti-competitive behaviour in the sector.
By Aditya M
The Proposal
Senator McKenzie's proposal aims to enhance competition within the aviation industry, which is currently dominated by Qantas and Virgin Australia. She argued that the presence of Jetstar allows Qantas to exercise greater price discrimination, potentially leading to higher fares for consumers. McKenzie suggested that the threat of a forced split could serve as a deterrent against such practices, even if the government does not ultimately pursue the break-up.
Reactions and Counterarguments
The proposal has received mixed reactions. Nationals Leader David Littleproud has expressed caution, stating that while the idea is worth exploring, it is too early to pursue such drastic measures. He emphasized the need for a calm and methodical approach to competition policy, similar to the steps taken in the grocery sector to address the market dominance of Coles and Woolworths.
On the other hand, Qantas has strongly opposed the idea. The airline argues that the Australian Competition and Consumer Commission (ACCC) has been actively monitoring the industry and has found no evidence of anti-competitive behaviour. Qantas also highlighted that both its and Jetstar's fares have been trending down, adjusted for inflation, and that Jetstar offered 12 million fares for less than $100 in the last financial year.
The Broader Context
This debate comes at a time when the federal government is already looking into various aspects of the aviation industry. A recent white paper recommended the establishment of an ombudsman authority to compel airlines to improve customer service. Additionally, there have been moves to address "slot hoarding" at Sydney Airport, where airlines hold onto take-off and landing slots without using them, potentially stifling competition.
What’s Next?
The Coalition is seeking to have the issue considered by Treasury as part of its competition review. While the idea of splitting Qantas and Jetstar is still in its early stages, it has sparked a significant conversation about the future of competition in Australia's aviation sector.
As this debate unfolds, it will be crucial to balance the need for competitive airfares with the operational realities of running a major airline. Whether or not the government decides to pursue a split, the discussions alone could lead to changes that benefit Australian travellers.
Add comment
Comments