ABC PERTH DRIVE
TUESDAY, 30 JANUARY 2024
SUBJECTS: New Treasury research on competition in the airline industry.
JO TRILLING, HOST: As the new year begins you might be thinking about booking a holiday and living here means travelling by air does not come cheap. Well, a new government study has been looking at airline competition and has found that airfares drop significantly when two or more airlines compete against each other, which means bigger savings. I don't think that's news to anybody. Well, Andrew Leigh is Labor's Assistant Competition Minister. He says more competition equals lower prices and more flexible travel options for you.
ASSISTANT MINISTER FOR COMPETITION, CHARTIES, TREASURY AND EMPLOYMENT ANDREW LEIGH: Ever since Adam Smith we've known that more competition means lower prices. But this quantifies the impact on the domestic airline market. It shows that if you've got a monopoly carrier flying a route, then airline passengers pay on average 39 cents per kilometre. If you've got three carriers, that drops down to 19 cents per kilometre and it drops further still as you get four or five carriers on a route.
One of the other things that the study shows is that even in anticipation of a new competitor coming into a route, prices fall. So, Australians really benefit from greater domestic airline competition, which is one of the reasons that the Government's bringing out an Aviation White Paper and putting in place a slots review to make sure that the slots are allocated in a way that doesn't lock in the incumbents and lock out the challengers. Perth's distance from the rest of the country does make domestic aviation competition important and Perth's international engagement means that more international carriers really matter.
The Labor Government's increased the number of flights that Turkish Airlines will bring into Australia, Vietnamese carriers are increasing their number of direct flights. We've got some 60 carriers coming into Australia flying about 1700 inbound flights every year. So, international airline competition matters as well. We've been encouraging Qatar Airlines to take up the opportunity to fly into some of the unrestrained airports, places like Adelaide and Canberra. I know they were disappointed with last year's decision, but the view the Australian Government has taken is that there are plenty of places they can fly into and we'd like them to be coming there.
If you look back historically, we had in the pre-World War II era one of the most vibrant domestic airline industries in the world, with a whole lot of different carriers. Then after the war, the duopoly prevailed and that meant that prices were kept high. It was only through the introduction of airline competition in the late 1980s that middle-class Australians started to be able to afford a holiday that involved getting on a plane. That's something that's important to many Australians. It's important to business.
So, many businesses rely on face-to-face contact and the movement of goods. And so for a nation that is fundamentally a trading nation, located a long way away from the rest of the world, aviation is how we bring in ideas, products and engage with the rest of the world. If you're committed to openness, you need to be committed to getting more domestic and international aviation.
TRILLING: That was Andrew Leigh, he's Labor's Assistant Competition Minister. He says more competition when it comes to airlines equals lower prices and more flexible travel options for you.