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The Productivity Commission is calling on the federal government to give international airlines unlimited access to Australia, saying it would immediately lower costs for passengers.
In its submission to the Senate inquiry into the government’s decision to block Qatar Airways’ bid for more Australian flights, the Commonwealth economic advisory body said restricting access to carriers increased prices and impeded access to quality services.
“These effects are ultimately felt by the community, particularly passengers travelling abroad, tourism operators and users of international freight services,” the Productivity Commission said.
Transport Minister Catherine King made the decision to reject Qatar Airways from adding flights to Australia.Credit: Alex Ellinghausen
Airlines can fly to and from Australia under one of two government agreements known as bilateral air service rights or open skies agreements. The majority of approval decisions, including the one on Qatar Airways, are governed by the former, which give airlines two chances a year to apply for more services into Australia’s biggest airports.
“A more efficient outcome would be to allow foreign airlines to access, on an unlimited basis, Australia’s major airports through amendments to bilateral air services agreements,” the commission said.
Carriers from seven nations – including the UK, United States, China and India – have unrestricted rights to fly to Australia under a reciprocal arrangement that also allows Qantas and Virgin to put on as many services to those countries as they see fit.
The commission singled out Qatar as one national carrier that was forced to operate “ghost” flights, with few or no passengers on some legs within Australia, because of restrictions under its bilateral agreement. It also said the airline would immediately benefit if the current regime was replaced by an open skies agreements.
Another issue raised by the commission, is the cost-benefit analysis of approval decisions to be made public due to ongoing concerns about the transparency of calls made in the national interest. Transport Minister Catherine King’s rejection of Qatar on national interest grounds has come under concerted criticism and remains under scrutiny.
Meanwhile, Prime Minister Anthony Albanese said on Thursday that Qantas, as the national carrier, should be flying internationally out of Adelaide. “I certainly would want to see Qantas fly out of and into Adelaide,” he said.
He also told 5AA radio station his government had “stood up to Qantas”, including in the Transport Workers Unions’ legal fight over the 1700 sacked workers.
The government has repeatedly said Qatar could increase its flights into smaller airports. However, aviation industry participants including the airports have said that it is commercially unviable for the airline to do so.
Australian Airports Association head James Goodwin said the government’s current approach to air service agreements was not practical and did not adequately support the aviation industry or travellers.
“Why should Australian passengers be used as a bargaining chip for things like free-trade agreements? Airports can self-regulate capacity and demand. Even if we open the market entirely, it doesn’t mean we’ll necessarily be flooded with seats, but it would be fairer,” Goodwin said.
The Board of Airline Representatives Australia submitted a response to the Senate on behalf of 40 carriers which fly to Australia in favour of additional flights to the country. These airlines collectively make up more than 50 per cent of Australia’s international flying capacity and include Virgin Australia, Qatar Airways, Singapore Airlines and Etihad but do not include the main benefactors from the Qatar rejection: Qantas and Emirates.
“Whilst the actual contributory figures may be debated by academics, the underlying point is that growing international aviation capacity is incremental and not dilutionary for the Australian economy,” the airline coalition said in its submission.
It also expressed support for more open skies agreements.
”Every new service, no matter whether on smaller aircraft from Australia’s closest neighbours in the Pacific Islands, to the largest aircraft operating from the furthest possible airports, bring additional visitors to Australia who spend money and generate economic activity,” the airline coalition said.
Qantas has not made a submission to the Senate select committee. Chair Richard Goyder and chief executive Vanessa Hudson will give evidence at a hearing on the matter next week.
In its submission, the Australian Chamber of Commerce and Industry (ACCI) accused the government of having “effectively inflated the cost of airfares” by rejecting Qatar’s application, which it said restricted the number of tourists who can visit Australia.
“This is a significant deterrent for tourists to travel to Australia,” the employer group said.
It cited data from the Australian Travel Association’s ticketing system which shows price increases on international fares from Sydney airport in 2023 are up to 99 per cent higher than the same period before the pandemic.
“With unrestricted, ‘open skies’ air services agreements with only nine other markets, Australia is well off the pace of leading aviation markets,” ACCI said.
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