Treasurer Josh Frydenburg has instructed the ACCC to monitor whether airlines are reintroducing capacity too quickly purely to damage rivals.
The commission will now look for “early signs of damage” or moves that could “damage a competitor or drive them off route”.
It comes days after Qantas announced it was planning to add 300 more return flights per week by the end of June, and Virgin said it would add 30,000 seats across 320 flights in July. More flights are expected to be added of the coming months as coronavirus restrictions ease and demand increases.
The news means the Australian Competition and Consumer Competition now has a specific remit to investigate the issue, and will be required to submit quarterly reports to the government.
The move will be interpreted by many as a boost for Virgin, which will attempt to re-enter the market after coming out of administration.
TWU national secretary Michael Kaine said, “We welcome the move to monitor competition in the domestic market particularly at this uncertain time for aviation and with Qantas jumping in with $19 fares to try and knock Virgin out of the market.
“The focus must be on ensuring that air travel is affordable, reliable and serves regional Australia.”
In April, the chairman of the ACCC publicly lent his support to Virgin Australia in the lead up to its administration.
Appearing on RN Breakfast, Rod Sims said, “We desperately need two full-service airlines when this is over. Whatever the government does is fine by me.”
The ACCC is also currently considering a complaint from Virgin chief executive Paul Scurrah against Qantas chairman Alan Joyce after he lobbied the government not to bailout Virgin.
Joyce said that financial help should be spread evenly and that it should be “survival of the fittest”.
“Separate from the investigation – it’s obviously linked a bit – comments about the survival of the fittest aren’t helpful at a time when we do have a crisis and we need a more co-operative spirit to get through this,” said Sims.
“You would have seen today we’ve authorised the supermarkets to co-operate, last week we authorised the banks to co-operate, we’ve got a real crisis here and we need to be working together, not making statements like ‘survival of the fittest’.”
Virgin Australia said in a statement relating to the new ACCC directive, “Virgin Australia welcomes new monitoring to help ensure Australia’s aviation sector remains competitive, particularly as we move to increase flights as travel restrictions ease.
“Maintaining a competitive aviation sector is important for consumers, Australian tourism and the country’s economic recovery post COVID-19.”