Razor thin

While Contrails has not attended any of the hearings, the off-record comments of a Spanish Inquisition from quite a number of participants and reported comments by chair Jessica Shaw MP are troubling.

Shaw lashed out at Qantas’s announcement that local residents of some north-west towns could get a 30 per cent discount off its top fare levels for four return flights a year as lacking Compassion.

According to website WA Today Shaw asked Qantas Domestic chief Andrew David: “Where’s the compassion in that, taking 30 per cent off your most expensive fare?”

“It’s their only form of public transport, it’s not a luxury for these people, it’s a necessity.”

True it is a necessity, but what is also a necessity is that Qantas and Virgin Australia make a profit to replace ageing aircraft such as the 100- seat Fokker 100s that carry the burden in WA.

Certainly Qantas is finally making solid profits after seven years of no dividends but Virgin is still bouncing around in red ink.

The reality is, when one looks – as Contrails has done many times – into the fare levels charged, the fares within WA are equal to or in most cases better than comparable flight distances anywhere in the world.

And a startling number revealed by Qantas is that a massive 75 per cent of fares sold within WA by Qantas are at the lowest Red e-Deal level with another seven per cent sold at Sale Level.

Only two per cent of fares are at the highest level, with 11 per cent at the fully flexible level and the balance is staff or FOC (free of charge) travel. David told the inquiry that according to government data in real terms as at June 2017, all fare categories are lower than they were in 2003.

“The best discount economy fare for example was 38.5 per cent lower, despite the Australian CPI increasing by 32.1 points over the same period,” David said.

He added that during airfare sales, which occurred 25 per cent of the time during FY17, only 20 per cent of tickets were sold.

Virgin Australia told the inquiry that it had tried heavily discounted fares of over 30 per cent in regional WA for residents in 2014 and other groups and despite heavy promotion withdrew them because of a lack of interest. Many have claimed that the airlines are getting fat on the FIFO work with big block bookings of seats, but again the reality is very different with razor thin margins.

It’s their only form of public transport, it’s not a luxury for these people, it’s a necessity. WA MP JESSICA SHAW

While Australia may largely have a two-airline group duopoly when it comes to FIFO flights within WA there are six major competitors – Qantas, Virgin Australia, Alliance, Cobham, Skippers Aviation and Maroomba Airlines.

Jane McKeon, group executive government relations for Virgin Australia, noted that “the characteristics of the operating environment in WA make regional flying a particularly difficult proposition”.

“The state has a relatively small population base, with a strong concentration in Perth,” she said.

McKeon added that regional centres have small populations which contrasts with Queensland, where 45 per cent of the population lives outside the capital.

“Just 25 per cent live outside the capital in WA,” McKeon said.

“In Queensland there are 10 regional centres of more than 50,000 people which are served by RPT operations – there are none in WA,” McKeon said.

Qantas also warned that intra- WA services were dependent on the resources industry, and since the peak in 2013 its revenue from the regions has decreased by $255 million.

The high cost and difficulty associated with operating in the regional Western Australia market is highlighted by the fact that since 1960 48 airlines in Western Australia have been acquired or become bankrupt, David added.