Qantas and Virgin could invest more in customer service: ACCC

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The monitoring report – which did not publicly disclose any anticompetitive behaviour – would keep pressure on airlines to lift the bar on service reliability, she said, given the airlines have “not had a sufficient focus on addressing the elements as quickly as possible” to boost standards for the Australian flying public.

“Around 4.8 million passengers flew in December 2023, representing 94 per cent of pre-pandemic levels,” the ACCC said. Capacity peaked at 98 per cent in June and sat around 90 to 95 per cent since 2022, it noted.

Sector ‘still performs poorly’

The ACCC said reduced demand for corporate travel as more meetings took place virtually was stymying passenger numbers.

It flagged that “airlines have also exercised more discretion over adding seat capacity” but that they typically blamed shortages of staff, including pilots, for making these decisions.

The Australian Airports Association said the airline sector “still performs poorly across key metrics of airfares, delays, and cancellations”.

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“It is concerning the ‘best discount’ economy airfares have not yet fallen to pre-pandemic levels at a time when the cost of living pressures are hurting families, with the report showing the real price index of discount airfares still 4.5 per cent higher in January 2024 than it was in January 2020,” AAA chief executive James Goodwin said.

A Qantas spokesman said the airline was focused on improving its on-time performance. The Australian Financial Review revealed last month it had brought in McKinsey management consultants to fix its performance.

“Qantas and Jetstar have worked hard to reduce delays and cancellations, which we know frustrate our customers,” the spokesman said. “While our reliability has improved, we know there is still more work to do.”

Ms Cass-Gottlieb also pointed to issues with Airservices Australia that have contributed to poor reliability for passengers.

The ACCC has asked the government to establish an independent airline ombudsman to deal with customer complaints, as well as an overhaul of the way slots are allocated at Sydney Airport to allow for more competitors.

The report showed the entrance of Bonza as a challenger airline had put “incremental” downward pressure on airfares. However, it described Bonza’s ability to influence the broader market as “limited due to its minority market share of around 2 per cent, small fleet size and its route map that excludes the busiest domestic sectors such as the golden triangle”.

Ms Cass-Gottlieb said Bonza “would benefit from access to Sydney Airport”, backing calls for the government to implement recommended changes to the demand management system.