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The ACCC has warned it will be keeping a close eye on airlines to ensure they lower prices after the busy Christmas period.
Airfares are currently at record levels due to a combination of high fuel prices, strong demand and, crucially, the industry holding resources in reserve to mitigate delays caused by staff shortages.
However, the competition commission on Tuesday said it is “expecting” prices to go down after the holidays end and more employees are recruited.
“The ACCC will be monitoring the domestic airlines closely to ensure they return capacity to the market in a timely manner to bring downward pressure on airfares,” it said in its latest quarterly report on aviation.
“In this context, the ACCC would be concerned if the airlines withheld capacity in order to keep airfares high.
“Airfares are higher than they have been in years and higher than pre-pandemic levels. The average revenue per passenger, an indication of average airfares across all fare types, was 27 per cent higher in October 2022 than it was in October 2019.
“Of the different fare types, the discount economy fares are particularly high because airlines don’t need to offer sales in order to fill their planes. The discounted tickets that are made available are sold out quickly.
“An index of the discount economy fares across Australia’s top 70 domestic routes in November 2022 was more than double what it was in April 2022, when it hit an 11-year low. Flexible economy and business airfares have not increased as much as discount fares, and in November 2022 remained below pre-COVID-19 prices.”
The ACCC’s analysis comes after Australian Aviation earlier reported on Tuesday how aircraft flying on domestic routes were once again packed to the highest levels since records began in September.
New BITRE data released by the Department of Transport showed load factors — or the percentage of available seats occupied — were at 85.7 per cent, virtually equalling the record of 85.8 per cent set in July.
The figures also revealed domestic aviation in September was at 90 per cent of pre-pandemic passenger traffic, higher than previous months but down on the 96 per cent in June that led to record delays.
In total, 4.67 million passengers were carried on regular commercial flights in September 2022, compared to the 5.19 million in pre-pandemic September 2019.
The extraordinarily high load factors, combined with high prices, would explain how the industry is on course to deliver record profits this year.
Last month, Qantas revealed it would target an underlying profit of up to $1.45 billion for the first half of the financial year; Rex’s capital city 737 flights generated a $2 million profit in October; while Virgin has declared it had returned to real profitability for the first time since its damaging ‘capacity wars’ battle with Qantas a decade ago.
The Flying Kangaroo expects to carry 8 million passengers over the Christmas period, in a huge test of its service and reliability. The airline said it would both increase the number of flights on key routes and swap in larger aircraft in order to boost capacity.
However, it insisted it will still maintain an “operational buffer”, including standby resources, to manage the surge in customers.
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says:With respect I think the ACCC is out of order here. Their task is to monitor the business activity and, if they feel that “things” aren’t tickety boo their first point of contact should be with the CEO of the enterprise concerned then, if there is not a positive change go public. Regarding their current behaviour, issuing what amounts to a threat and being bully boys on the block in my view is way out of order and they should be counselled accordingly.