Competition issues at the forefront in aviation

4 June 2014

Competition issues have featured prominently in the rapidly changing aviation sector, ACCC Commissioner Dr Jill Walker said today at the Swinburne Aviation Industry Conference in Melbourne.

“The competitive landscape in the airline market has been characterised by rapid expansion and transformation,” Dr Walker said.

“Recent features of the Australian market include changes in airline structures and increased competition on international routes from mid-point carriers.”

“While the industry is confronting many changes, competitive challenges are no excuse for cartels.”

Dr Walker said there has been extensive alliance and code-sharing activity to provide ‘virtual networks’ in international markets.

“While alliances and code-sharing can promote efficient and competitive markets, they can also raise competition concerns and may require scrutiny under the Competition and Consumer Act.”

“The Act is well equipped to balance these competing considerations within the authorisation framework, which is focused on the net public benefits.”

Dr Walker said competition also depends on consumers being able to exercise effective choice based on the services airlines provide and the fares they charge.

“Online sales create opportunities for increased competition, but some booking systems may soften or distort that competition.”

In discussing the ACCC’s consumer protection role, Dr Walker said ‘drip pricing’ is an enforcement priority.

“Drip pricing involves sequentially revealing components of the total price and not revealing the full price until the end of the reservation process.”

“The final price paid may be substantially higher than the ‘headline price’, but after investing time and effort in the booking process, consumers are less likely to shop around.”

Dr Walker also highlighted the ACCC’s role in airport pricing and access.

“The ACCC monitors prices, costs, profits and quality of aeronautical and car parking services at major airports, we also review price notifications for air traffic control and rescue fire fighting services.”

“There are many competition issues at play within the aviation industry,” Dr Walker said.

Release number: 
NR 132/14
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Media team - 1300 138 917