Former Competition Watchdog Chiefs Call for Investigation into Rejected Qatar Airways Bid. Two former leaders of Australia’s competition watchdog have voiced strong criticism of the Australian government’s rejection of a bid by Qatar Airways for additional flight routes, deeming it a “bad decision” that disadvantages customers.
Allan Fels, the inaugural head of the Australian Competition and Consumer Commission (ACCC), expressed concerns that the government’s refusal to grant Qatar’s request was aimed at protecting Qantas from competitive pressures. check latest news about Qatar Airways.
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Negative Impact on Customers and Industries
Fels labeled the decision as “a really bad decision by any standards,” particularly given the ongoing discussions about competition within the market. He emphasized that the rejection would likely lead to higher airfare prices, which have already increased by 50% since the onset of the COVID-19 pandemic. According to Fels, allowing Qatar Airways to operate more flights would increase seat availability and subsequently drive down prices, albeit to the potential detriment of Qantas’ profits.
Controversial Government Decision
The Australian federal government’s refusal to grant Qatar Airways’ request for additional weekly flights to Sydney, Melbourne, and Brisbane has prompted speculation about the motives behind the decision. Assistant Treasurer Stephen Jones cited safeguarding the national interest and supporting Qantas’ profitability as the reasons for the rejection. However, the rationale has faced criticism from various quarters.
Differing Views from Industry Leaders
Qantas CEO Alan Joyce defended the government’s stance, asserting that extra Qatar Airways flights could disrupt market equilibrium. In contrast, Virgin Australia CEO Jayne Hrdlicka disputed this claim, highlighting the codeshare agreements between Virgin and Qatar Airways. Hrdlicka contended that allowing more flights would alleviate the high demand for seats in Australia and contribute to lower airfare prices.
Call for Investigation and Transparency
Rod Sims, former ACCC chair, joined the debate, expressing his confusion and concern over the decision’s impact on competition and airfares. He asserted that allowing new entrants into the market was crucial, given the current state of the aviation sector. There is growing pressure on the federal government to disclose the reasons behind the rejection, especially as it followed lobbying from Qantas.
Concerns Over Market Consolidation
A recent study by the e61 Institute highlighted concerns about market influence exercised by dominant companies operating in concentrated markets. Titled ‘the State of Competition in Australia,’ the report underscored the aviation sector’s high level of consolidation, leading to an “imbalanced” power dynamic between airlines and customers. Fels emphasized that the decision appeared to prioritize Qantas’ interests over those of customers and other industries.
Demand for Transparency and Independent Investigation
Fels called for an independent investigation into the decision, suggesting that the ACCC could oversee the probe. This sentiment was shared by Graham Turner, CEO of Flight Centre, who noted that blocking Qatar Airways’ capacity expansion would hinder efforts to lower airfares and negatively impact competition. Turner also pointed out the significance of the decision for Virgin Australia due to its reliance on codeshare agreements and international traffic.
Conclusion
The decision to reject Qatar Airways’ bid for additional flights in Australia has raised concerns about competition, transparency, and the impact on airfares, prompting calls for an independent investigation into the matter.