Qantas’ enviable dominance now comes with a big cost

Virgin’s political fight back against Qantas is gaining traction with a community irritated by high fares, poor service and record profits.
Jennifer HewettColumnistAug 29, 2023 – 6.21pm
Save

Share
Jayne Hrdlicka may not be nearly as well known as Alan Joyce, but she’s finally been able to extract political revenge for the imbalance.
The ability of the Virgin chief executive to leverage community irritation about high airfares and reduced service is clearly increasing the turbulence for both the Albanese government and Qantas.
Qantas dismisses Hrdlicka’s claim that international airfares would be much cheaper if only Virgin’s partner airline Qatar had been granted its request for 28 additional flights a week.

The bon homie between Qantas and the Prime Minister is coming under increasing scrutiny. David Rowe But the government’s various clumsy, contradictory explanations about its rationale for blocking Qatar’s application won’t persuade anyone trying to book a flight. That includes the most recent offering from Assistant Treasurer Stephen Jones describing Qantas’ $2.5 billion profit as a “good news story” – as opposed to another flashpoint for passenger anger and political cynicism.
“A disappointing statement,” muttered Hrdlicka, as she urged a review of the decision to “get the facts on the table.” Not that most people understand complex bilateral negotiations over international landing rights or protection from competition regularly given to national carriers. They do understand repeated domestic flight cancellations and international fares that have gone up by 50 per cent since COVID – just when they are so keen to travel.
It makes them far more responsive to any suggestion the government is willing to sacrifice their best interests by doing a deal with Qantas to crimp the competition. Even the Coalition is finding rare political traction in its pursuit of Labor over the “protection racket”.
Hrdlicka attracted headlines for suggesting on radio, for example, that airfares could be up to 40 per cent cheaper if Qatar was permitted one more flight a day to Brisbane, Sydney, Melbourne and Perth. The airline later clarified this percentage was 40 per cent of the 50 per cent increase in international airfares, making the improvement more like 20 per cent – and with no promises of an impact on domestic fares.
But such details register less with an annoyed public than last week’s announcement of record Qantas group profits, including a big jump in its domestic profit margin from 12.1 per cent to 18.2 per cent.
Virgin is also making plenty of money again, of course, following years of financial losses and its collapse into administration at the start of COVID. Yet, this has been achieved more quietly given the airline remains in private hands after a planned IPO this year was indefinitely delayed.
Virgin’s profit margin is in the high single digits, and it deliberately keeps its fares on the busy Brisbane Melbourne Sydney route around 30 per cent lower than Qantas on average. Nor do Virgin’s own regular flight cancellations and unredeemed flight credits seem to spark the same level of resentment.
To Joyce’s frustration, it means Qantas’ enviable market dominance, shareholder returns, surging share price and popularity with analysts now come with a big cost in terms of community perception and reputation.
Under current flying conditions, even Hrdlicka’s more cautious style in justifying delays and promoting Virgin’s honest intentions seems to play better than Joyce’s ebullient swagger about Qantas’ superior performance.
As he exits a tired fleet with an additional $24 million in his luxury hand luggage, Joyce’s previous ability to sell the Qantas good news story has instead become a story symbolising corporate greed rather than consumer interests – or the national interest.

Prime Minister Anthony Albanese is thought to have overruled his Transport Minister over the extra Qatar flights, which Qantas boss Alan Joyce admitted lobbying against. David Rowe That’s a remarkable turnaround from the sentimental national embrace traditionally afforded Qantas. New boss Vanessa Hudson will be under pressure to renovate the airline’s reputation as well as its ageing planes.
Flight Centre chief executive Graham Turner turned up that pressure Tuesday, demanding the government provide a reason for blocking Qatar when more capacity was clearly needed.
That’s particularly awkward to explain when the entire travel industry knows various government departments and agencies, including the department of transport, supported Qatar’s proposal for increased flights.
“In the travel industry ... it’s generally felt that [Transport Minister] Catherine King was overruled or her department was overruled from higher up in the Labor government,” Turner told Sky on Tuesday.
“It is generally suggested that it was probably the PM, and it’d be interesting to hear from both Catherine King and the PM whether that’s how it happened.”
Neither King nor Albanese seem to think this is at all interesting. King has been reduced to repeating the line the decision on Qatar was taken in the national interest while simultaneously scolding Qantas for “needing to do better”.
According to a Qantas spokesman, Joyce has regular conversations with Anthony Albanese – just as he has had with every Prime Minister over the years and as is natural for the boss of the national carrier.
According to Hrdlicka, there’s been no response to Virgin’s repeated requests for a meeting with Albanese.
Everyone from crossbencher David Pocock to ANZ chief executive Shayne Elliott – struggling with his own competition approvals over Suncorp bank – question Canberra’s logic. It certainly jars with Jim Chalmers’ review of competition policy: aviation is excluded.
Virgin argues Qantas’ claim it only has 18 per cent of the international market is misleading given Qantas and its partner Emirates have 43 per cent of the highly lucrative Australia Europe route via the Middle East. That’s double the percentage of Virgin and its partners, including Qatar with its broad range of direct flights to European cities.
Virgin’s self-interest is obvious. Any increase in Qatar’s landing rights would increase its ability to fly those passengers domestically.
It would also reassure Australians about its ability to offer international service through partner airlines like Qatar. But the key to Hrdlicka’s ability to make herself heard is the damage the government, and Qantas, have done to their own credibility.