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ACCC says Sydney slot rules damage competition

written by Adam Thorn | January 18, 2021
Virgin Australia opposes Qantas's proposed codeshare with Cathay Pacific. (Rob Finlayson)
Virgin Australia opposes Qantas’s proposed codeshare with Cathay Pacific. (Rob Finlayson)

The ACCC has argued the way Sydney Airport allocates slots is preventing new airlines from entering the domestic market.

In its submission to a senate enquiry examining the future of Australia’s aviation sector, the competition commission highlighted that pre-pandemic, Qantas and Virgin operated as an effective “duopoly”.

Under existing rules, slots can sometimes be allocated to an airline indefinitely, making it difficult for new challengers to enter the market.

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“Access to slots at Sydney Airport is a key barrier to entry and expansion in Australian air passenger services,” said the organisation in its submission.

Slot access is becoming a global issue again as the aviation industry seeks to exit COVID and regrow networks.

Many rules, which dictate an airline must operate a certain number of flights to keep the slot, have been suspended, despite budget airlines arguing they should have access.

“We oppose the extension of slot waivers into summer 2021 because this will lead to fewer flights and higher fares for consumers,” a Ryanair spokeswoman said in November. “Legacy airlines at hub airports will have no incentives to operate flights. Slot waivers distort competition by preventing low-fare airlines from expanding while legacy carriers are able to reduce capacity and raise prices.”

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More generally, the ACCC has been active during the pandemic, with Treasurer Josh Frydenberg instructing the organisation in June to monitor whether airlines are reintroducing capacity too quickly purely to damage rivals.

The commission was tasked with looking for “early signs of damage” or moves that could “damage a competitor or drive them off route”.

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3 Comments

  • Truman

    says:

    Then the ACCC should talk to the government increasing the movement cap and curfew!

  • Steve A

    says:

    We have already seen Qantas CEO Alan Joyce state publicly that he intends to increase QF domestic share to over 70% with Virgin reducing its fleet.
    What more evidence does the ACCC and the Senate Inquiry actually need.
    Slot waivers won’t see QF increase flights and services. All that it will do is prevent competition and keep prices higher than necessary.
    Qantas doesn’t operate many of the flights that it has slots for in any case. It habitually cancels flights on a regular basis and just rebooks customers onto the next flight, not very long after of course, because it has hogged all of the slots.
    This stops competition starting because they can’t get slots in slot-constrained airports like MEL and SYD . If QF has slots that it doesn’t fly then it needs to either be fined heavily for not flying them or lose them.
    We are all well aware of Alan Joyce’s shenanigans by now.

  • Warwick

    says:

    Just what this country needs, tens’ of more airlines’ operating, domestically! NOT!
    We’re not Europe, or USA, & do NOT have the population to support heaps of carriers’ domestically!
    When will overseas airlines’, & federal authorities’ here realise this?
    As it is, with three, come March 2021, the skies’ will be crowded, covid willing.

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