Qantas gouges customers on fares, unfair-pricing report says

Qantas Airways Ltd. exploits its dominance of the Australian air-travel market to charge passengers excessively high fares, according to an inquiry into unfair pricing by the country’s former antitrust chief.

Allan Fels, former head of the Australian Competition and Consumer Commission, singled out Qantas in his final report Wednesday, accusing the country’s biggest carrier of “price gouging.” In late 2022, Qantas’ fare increases were so large that a quarter of the country’s inflation was mainly caused by the airline, Fels said.

The government should remove “unnecessary restrictions on competition on international and domestic aviation,” Fels said in his report, which was commissioned by the Australian Council of Trade Unions. The government’s decision last year to block more Qatar Airways flights into Australia was “clearly” in the interests of Qantas, he said. Qantas had lobbied against the extra services. 

Responding to the report, Qantas said fares have declined from a December 2022 peak. The spike in prices reflected seat reductions as the aviation industry restarted following the pandemic, it said in a statement.

Fels’ findings inflict further damage to the Qantas brand after a string of reputational crises, including allegations by the ACCC that the airline sold tickets on thousands of flights it had already decided to cancel. Fel’s report follows the announcement of multiple government-led inquiries into corporate Australia during the cost-of-living crisis. Treasurer Jim Chalmers has directed the ACCC to investigate pricing and competition in the supermarket sector.

New legislation, or a so-called divestiture law, should be introduced to allow the government to break up big businesses for the worst competition abuses, Fels said. He cited similar, successful laws in the US and other countries. 

Such a law could possibly apply to Qantas, Fels said later, after an address to the National Press Club of Australia.

More broadly, Wednesday’s report challenges the Reserve Bank of Australia’s assessment that companies didn’t excessively increase prices during the period of high inflation to bolster profits. The RBA has maintained that the jump in profitability as prices surged was due to elevated commodity values that lifted mining firms’ income.

“There is much support for the view that prices have added much to inflation,” Fels said. “Claims that the rise in profit share in Australia as explained by mining do not hold up.”