Jun 12, 2023
Virgin Australia says more Qatar Airways flights would lower airfares, Flight Centre says 'no logic' to decision to block Qatar flights
Virgin Australia boss Jayne Hrdlicka says allowing Qatar Airways to increase the number of flights into Australia would lower airfares and boost tourism. Last month, the federal government rejected an
Virgin Australia boss Jayne Hrdlicka says allowing Qatar Airways to increase the number of flights into Australia would lower airfares and boost tourism.
Last month, the federal government rejected an application to add 21 extra flights per week to the 28 the Middle Eastern carrier currently offers into Sydney, Melbourne and Brisbane.
It said it was not in the national interest, but the decision is being criticised as protecting Qantas from competition.
On Monday, Qantas boss Alan Joyce defended the decision before a Senate committee and said allowing an extra 21 flights a week by Qatar Airways would distort the market.
"We said to the government that capacity was coming back … quite rapidly in all of these markets, and that granting a carrier doubling their traffic rights in the short term would cause distortion," Mr Joyce said.
"A lot of capacity is being added to the market and it's going to be significant over the next year, and that will bring down airfares quite considerably."
But Ms Hrdlicka told RN Breakfast it was "nonsense" to say allowing Qatar more flights was market distortion.
"You need to add seats where the demand exists," she said.
"And the constraints are in these major capital cities.
"And that's where the seats need to come and that's what Qatar has applied for.
"It's also a bit of a nonsense to say it's a market distortion when there's such little capacity that's recovered."
The Virgin boss said allowing Qatar to increase its flights into major capital cities would lower airfares, which were "abnormally high".
"Airfares are about 50 per cent higher today than they were pre-COVID.
"The statistics say two-thirds of the seats that were flying in and out of Australia pre-COVID are back and one-third of those seats are not yet back.
"And so if we get those seats back, airfares will be as low as they possibly could be.
"I guess that would be a reduction of at least a third, maybe 40 per cent reduction in airfares."
Ms Hrdlicka said Qantas and Emirates dominate flights into Europe and the Middle East with around a 45 per cent share, while Virgin and its partners, including Qatar Airways, have a 23 per cent share.
Ms Hrdlicka called on the government to reconsider its decision to block extra services by Qatar.
"We've sought a number of meetings and we haven't heard back yet.
"I think there may have been late information coming in from Qantas to try and stop this and there wasn't enough information to help balance an interested view.
"I would just encourage the government to step back and say, let's get all the facts on the table and understand what's actually in the national interest.
"There's over $500 million in economic interest at stake here for the tourism industry — that's a lot of jobs."
Ms Hrdlicka also said that reported comments by Assistant Treasurer Stephen Jones that the Qatar application was blocked to keep Qantas viable were "disappointing".
"They're privately owned, listed in the public market, they're not government owned.
"I'm not sure what was intended by the statement."
Qantas posted a record before-tax profit of $2.5 billion for the 2023 financial year.
It was revealed under tough questioning of Qantas executives by senators in Parliament on Monday that Qantas still had at least $470 million of flight credits that it owes customers.
Ms Hrdlicka told RN Breakfast that Virgin owed around $100 million in flight credits to customers, down from $1.2 billion during the pandemic.
She said customers were also owed $300 million in credits that could not be refunded because Virgin went into administration during the pandemic, and customers needed to redeem them by the end of the year.
Meanwhile, the chief executive of Flight Centre told ABC Radio the decision could end up "blowing up on the government".
Graham Turner told The World Today program that the decision was not logical and would cause airfares to stay higher.
"There's no logic to it, and it is a bit of a worry because we have more demand than capacity," he said.
"So any extra capacity — that, certainly for our industry, is very important.
"It was clearly not in the national interest as far as I can see.
"You could argue that it could have been in Qantas's interests, it certainly wasn't in Virgin's interest because they have a codeshare relationship with Qatar, so I just don't think it was an argument that held any water."
Mr Turner called on the government to reveal who was responsible for the decision to reject Qatar Airways's application.
"I believe the recommendation from the Department of Transport to the minister, Catherine King, was that it be allowed," he said.
"But the story is that it was someone above her that basically had a captain's call, presumably the prime minister."
"So it'd be interesting to know: who actually made the call, who made the decision, what the recommendation was, and what was the reason for it?
"Because these are questions that [have] just not been answered yet."
Shadow finance minister Jane Hume told ABC News Breakfast that the rejection of the Qatar bid sounded like a "deliberate attempt to bolster up Qantas and keep prices higher for longer".