Domestic airfares have soared well above pre-pandemic levels, and the extra revenue from more expensive flights has led Australia’s three airline groups to forecast a profitable financial year after three years of significant losses, the ACCC’s latest Airline Competition in Australia report reveals.
Domestic airfares increased significantly between April and August this year as airlines reduced capacity to manage staff shortages, and jet fuel costs climbed, the ACCC’s latest Airline Competition in Australia report reveals.
The number of passengers flying domestically in April 2022 was the highest it has been since the pandemic began, but jet fuel prices have surged to record levels and airfares are set to increase in the coming months, the ACCC’s latest Airline Competition in Australia report reveals.
The quarterly report, released today, shows 4.5 million passengers flew on Australia’s domestic airlines in April, which is 89 per cent of pre-COVID levels.
Australia’s four largest airports (Sydney, Melbourne, Brisbane and Perth) had a combined operating profit in 2020-21 that was only about five per cent of what it was in the last full financial year before the pandemic, the ACCC’s latest Airport Monitoring Report reveals.
The report also shows that the number of domestic and international passengers using the four airports in 2020-21 was between about 17 per cent and 40 per cent of their average pre-pandemic levels.
The domestic airline industry is facing challenges from the changing COVID-19 environment but consumers have more choice, face cheaper airfares and stand to benefit from new carrier Bonza’s entry later this year, the ACCC’s latest Airline Competition in Australia report reveals.
The ACCC will not oppose Sydney Aviation Alliance’s proposed acquisition of Sydney Airport (ASX: SYD).
Sydney Aviation Alliance is a consortium of investment funds which each have investments in a range of infrastructure assets, including shareholdings in other Australian airports.
“Throughout our investigation, we heard that there is very little, if any, competition between Australian airports,” ACCC Chair Rod Sims said.
Travel restrictions as a result of the recent COVID-19 Delta outbreaks have brought the majority of domestic flying to a stop and delivered a significant blow to the local airline industry, the ACCC’s latest Airline Competition in Australia report reveals.
Privatising assets without allowing for competition or regulation creates private monopolies that raise prices, reduce efficiency and harm the economy, ACCC Chair Rod Sims said in a speech on Thursday.
Speaking at the 2021 ACCC/AER Regulatory Conference, Mr Sims discussed the need to either avoid monopolies, or if not then regulate them, to prevent costs to the economy arising from unfettered use of their market power.
Mr Sims put forward two possible solutions to avoid privatisations creating future unfettered private monopolies.