CBASA – Tuesday September 26, 2023
Dr Alex Robson, A/g Chair
Senator BABET: Dr Robson, your submission to this committee stated: … there would likely be net benefits to the Australian community from further liberalisation of international air services. We’ve talked about granting international airlines more access to Australia’s major airports, like Brisbane, Perth and Sydney. In your opinion, what else could we do in order to bring down the cost for the Australian consumer and increase competition in the market?
Dr Robson: I’ll just repeat what’s in our submission. I’m not going to comment on any additional measures. We haven’t been asked to look at that. As I said earlier, the commission doesn’t shoot from the hip. If we were asked to look at what else could be done, we would undertake that analysis and report to government.
Senator BABET: Okay. Are you familiar with the open skies arrangement? Open skies is basically a deal between two or more nations, where they allow for unlimited commercial air services without approval from a minister as such.
Dr Robson: Yes.
Senator BABET: Do you think something like that would be beneficial to the Australian people? Dr Robson: Potentially, it could be, yes. Those sorts of arrangements, I understand—of that nature—exist between Australia and New Zealand, and Australia and the United States.
Senator BABET: At the moment I believe we’ve got seven open-skies type arrangements, whereas the US has over 100 of these arrangements and Singapore has over 60. Why do you think Australia only has seven?
Dr Robson: I’m not going to offer an opinion on that other than to say, yes, we think there would be benefits from moving towards such an arrangement.
Senator BABET: Alright. Qantas do not run international services into smaller capital cities—Adelaide, for example. They’ve got minimal international air services out of Darwin and out of Canberra, as well. This, they say, is due to profitability. Given that Qantas don’t want to use Adelaide for profitability reasons, despite pleas from the Adelaide government, why should other airlines do so, even those owned by overseas interests?
Dr Robson: Part of the point of our submission is that the answer to that question could be gained, and some light shed on it, if you did transparent cost-benefit analysis. If you’re asking me why shouldn’t that happen, without the cost-benefit analysis I don’t know.
Senator BABET: Where does the Productivity Commission see the greatest opportunity to deliver growth in the aviation sector?
Dr Robson: As we outlined in our submission, to the extent that there are capacity constraints, they can push up costs and airfares for consumers. So it’s likely that the biggest gains—and, in particular, gains to Australian consumers—would come from liberalisation.
Senator BABET: What do you mean by ‘liberalisation’?
Dr Robson: It’s along the lines that we’ve been discussing today—being more open with respect to foreign competitors coming into Australia.
Senator BABET: Do you think there is a monopoly in Australia, with Qantas and Virgin? Dr Robson: It wouldn’t be a monopoly; there are two of them. If you were going to describe it—
Senator BABET: Well, Qantas has got the vast majority of market share.
Dr Robson: Yes. I think it’s fair to say that there is a high concentration in that industry, and companies are likely to have market power. Now, whether they exercise and abuse that market power is a matter for the ACCC. But there is a high concentration.
Senator BABET: Do you think Qantas abuses its market power?
Dr Robson: I’m not going to offer an opinion.
Senator BABET: Thank you, Chair. That’s enough for me.
Mr Ahmet Halid Kutluoglu, General Manager Australia and New Zealand
Mr Stewart Tully, Chief Operating Officer
Senator BABET: I’ve got some questions for Mr Kutluoglu. At the moment you’ve got seven flights into Australia, and you’d like seven more; is that correct?
Mr Kutluoglu: We haven’t revealed what we requested so far. If it is possible, I can privately answer that question.
Senator BIRMINGHAM: Or it can be provided on notice.
CHAIR: On notice, in a confidential manner.
Senator BABET: We’ll contact you about that afterwards. Given that Qatar Airways was not allowed to expand into Melbourne and Sydney, how confident are you that your application to operate small flights will be granted?
Mr Kutluoglu: I am here from an airline perspective. These talks are with government offices. Considering we have a huge Turkish community which constantly requires our flights to come here so it can be easier for them to travel, and considering the need of Australia to take advantage of our network—as I said, we are the largest network carrier in the world and we go deeply into every little city, especially in Europe. If you want to transfer, you can directly go to the small city you want to go to; you don’t have to go to the main cities like you do for other airlines and make another transfer. Our product is very convenient. This week we won the first-class airline award again. I believe our network and the product and the request from the community would make a change in that decision, hopefully.
Senator BABET: My next question is for Alliance. I understand you don’t compete in the retail market; that’s fine. I was wondering if you can make some general comments. The Prime Minister claimed recently that we’ve got the most competitive aviation market in the world ‘bar none’. Do you agree with the Prime Minister’s statement?
Mr Tully: I can’t comment on the rest of the world, but it is very competitive on a number of levels. Yes, I would agree.
Senator BABET: You would agree that it’s competitive, even though Qantas and Virgin—just those two— control over 90 per cent of the market. Do you think that’s competitive?
Mr Tully: I think it’s competitive on a number of levels. There are opportunities for airlines coming in. I look at Rex and Bonza, and there have been no barriers to those people coming into the market. Senator BABET: Canberra Airport gave evidence last week about predatory behaviour from Qantas on regional routes, where they’re muscling in to regional routes and taking out smaller airlines. Rex, in their submission, have also made claims of predatory behaviour from Qantas. Is that something that you’ve experienced at your airline?
Mr Tully: No, it’s not.
Senator BABET: I have no further questions.
Mr Burt Sigsworth, Managing Director, Airport Operations in Australia
Senator BABET: I think you said 4,000 employees—you’ve got a significant workforce in the Australian aviation industry. Can you tell the committee how your workforce fared during the recent industry shutdown from the pandemic and how they’re doing now?
Mr Sigsworth: It was obviously particularly difficult for workers at dnata. The aviation industry in Australia shut down harder and for longer than most industries around the world. Dnata was unfortunately one of the few companies that was not a recipient of JobKeeper, so it was a particularly difficult time at dnata. We, as did the rest of the industry, saw a pretty big exodus of employees to other industries. The aviation sector has also started up very quickly, so we’ve had to recruit and train staff at a fairly rapid rate. Both the shutdown and the startup have given significant challenges to our industry.
Senator BABET: Have you recovered from the pandemic? What percentage of your staff came back that had previously left?
Mr Sigsworth: I don’t have the figures as to a percentage that came back. It was not really a lot. I think we managed to keep a certain amount through various other activities that were not non-core activities. We tend to be getting new applicants to the industry now.
Senator BABET: Would you see an expansion of air services as a good thing for your workforce and for dnata?
Mr Sigsworth: Do you mean providing ground services?
Senator BABET: Of course.
Mr Sigsworth: Of course. That’s the business that we’re in, so expansion of that is good for our business and good for those employees that work in our industry.
Senator BABET: The Australian government has said quite a few times that one of the reasons for declining Qatar’s increasing of the number of flights into Australia was in the national interest. I’m just asking you in general terms: what do you think that means? I have no idea what that means. Mr Sigsworth: I couldn’t comment.
Senator BABET: Fair enough. What is the demand like for international freight in Australia at the moment? Are our international and domestic carriers coping, or do you think we need more services?
Mr Sigsworth: ‘Are they handling the volume of passenger demand?’ Is that the question?
Senator BABET: Do you think we need more domestic and also international carriers with regard to freight in Australia? Is there an opportunity there?
Mr Sigsworth: Yes, there’s an opportunity there for sure. We have not recovered pre-COVID volumes as far as freight is concerned. So there’s capacity in the industry to handle more freight. Senator BABET: Are you seeing a rise in cancellations over the last 12 to 18 months at all? If so, do you have any information as to why that could be occurring?
Mr Sigsworth: I think in the initial ramp-up there was a high level of cancellation compared to what we would recognise in the industry before COVID. I think that was down to probably a number of factors, but certainly having the right level of staffing was an issue at that time for everybody in the industry—airlines service, providers, everybody. At least from my perspective, that would be a factor. In more recent times, at least for the industry that we service, I don’t think we’re seeing a large number of cancellations compared to pre COVID times.
Senator BABET: Thank you, Chair. I have no more questions.
Australian Meat Industry Council
Mr Sam Munsie, General Manager Trade and Technical Affairs
Senator BABET: Mr Munsie, recently transport minister Catherine King rejected an application for Qatar to essentially double its flights into Australia. You mentioned before that Qatar is one of the biggest markets for chilled Australian beef. Is that correct?
Mr Munsie: Not for beef. It is an important market for sheepmeat. I don’t have the exact figure in front of me.
Senator BABET: That’s okay. After being asked about this decision, the minister provided four different justifications, one of which was ‘the national interest’. I would argue that it is against the national interest to restrict flight numbers. Do you have any view on that? Would you agree or disagree?
Mr Munsie: As the meat industry, we’re well aware of national interest considerations in our access to international markets. We’re a big beneficiary of free trade agreements, and often that’s a key consideration, and we understand and appreciate that. That said, we welcome information that is clear about what those considerations are. We would assume and very much hope that economic prosperity and trade aspects are a key consideration of that national interest context. We welcome the feedback on where it sits and what those are. We would advocate more broadly just for transparency around what the national considerations were so that we know that and we can provide advocacy on behalf of our members that reflects those interests for those considerations. Senator BABET: Thank you. Obviously, a lack of international flights is undoubtedly having an impact on access to international markets and potentially hampering export capacity. Do you think our government has been asleep at the wheel when it comes to airline competition specifically in relation to the export of chilled meat products?
Mr Munsie: I think we’ve seen some great improvements since COVID. Obviously, we had great disruption. In particular, the international freight assistance mechanism during COVID was heavily utilised by our industry and our members. Ultimately, we have seen an improvement in getting to the point where it is, but, judging by the statistics that we’ve seen and taking the marker of success as the rates that we’re paying, we’re still paying roughly twice as much as we were pre COVID. It suggests that there’s more to be done. It’s probably necessarily a mix of government and commercial players. We would support the policy settings being right so that those conditions can be met and we have the capacity that we need.
Senator BABET: Sounds good. Do you think our farmers get enough of a seat at the negotiating table when it comes to air service agreements and things of that nature?
Mr Munsie: Certainly, as the red meat industry, we enjoy and welcome close collaboration with government on a number of issues, particularly free trade agreements. Technical market access, which are the technical conditions that we need to meet with importing countries to sell our product, is necessarily done hand in glove with government. That said, perhaps bilateral air agreements are an area where we haven’t been as engaged as we have in other areas, and we’d certainly welcome any opportunity to work with government and make our voice and our members’ voices heard in those discussions.
Senator BABET: Have you felt any impacts due to cancelled or delayed flights in the meat industry in general? Do you have any data on devalued or wasted products or anything like that, or is that not an issue?
Mr Munsie: I can’t say either way whether it’s an issue. I think some of the evidence you’ve received already had some stories from particular people who’ve been impacted in that space. What I can say is similar to my previous comment: we look to make as many aspects of the export system as smooth as we can. Cancellations or last-minute changes necessarily add cost and make life more difficult, particularly when we’re dealing with a very robust regulatory system where we have government certificates and other aspects that lead with the date of departure and very strict conditions on them. They all need to align; otherwise, they won’t be let into the importing country. Any disruption or problems there just make our lives more difficult.
Senator BABET: During the pandemic years, what impact was felt by your industry and your members? Have there been any lessons learnt? What can we do better next time? Do you have any comment on that?
Mr Munsie: I think there were a broad range of impacts across our industry. It’s hard to summarise all of them. Given the export focus of our trade and our industry in general, maintaining access to those markets when there were little to no planes in the air was critically important. I mentioned the International Freight Assistance Mechanism as a vital thing that we advocated for at the time and we very much welcomed. It was very beneficial to our industry. While we understand it had to end, it served a critical role in maintaining our customers and maintaining our reliability, and I think it did a lot to enhance our international reputation to be able to provide food security to a lot of our customers around the world during a critical time. That said, it has highlighted the fragility of the system. We have some lessons learnt in how we can operate, and this applies to sea freight as well, to an extent; there were massive disruptions with ports as well. But I think it showed adaptiveness and a bit of a push towards more electronic systems that help facilitate trade. There have been a number of lessons learnt. Ultimately, it shows that we and our members appreciate being highly engaged in the freight space, because it is so critical. It doesn’t matter how much meat we have in stock here; if we can’t get it to our customers, we’re going to be in strife, given the vast majority is being exported.
Senator BABET: How important is it, to your members, to your council and to your industry, that these 28 extra Qatar flights happen?
Mr Munsie: As I said, we support any increased capacity. An extra 28 flights is not going to make or break our members, but it will help. Anywhere we can advocate for that help, we’ll support it. That said, it doesn’t necessarily have to be Qatar; we just want the flights. We want the extra capacity, and we would like consideration of our needs in those discussions when those decisions are being made.
Senator BABET: Have you ever met with Minister King, by any chance? Mr Munsie: I know I haven’t; I’m not sure if my CEO or anyone from my organisation has. I’m sorry; I’ll probably need to take that one on notice.
Senator BABET: That’s alright. Thank you, Mr Munsie.
Brisbane Airport Corporation
Mr Ryan Both, Executive General Manager, Aviation
Ms Rachel Crowley, Executive General Manager Communications and Public Affairs
Senator BABET: Obviously you’ve all been in favour of more Qatar flights in to Brisbane—I’ll ask Brisbane first—for many years. What impact do you think the lack of Qatar flights in to Brisbane has had on tourism, on cargo export industries et cetera. Do you have any general comments?
Mr Both: I mentioned earlier that airfares are the starting point. I think higher airfares restrict travel. They restrict trade. They prevent people from visiting family and friends—and in both directions. So we have fewer Europeans, who comprise the primary market we’re talking about, visiting Australia and visiting Queensland in particular. Higher airfares are not good for the economy. They’re not good for choice. That’s the primary impact. We’ve heard earlier evidence regarding meat exports. It’s a very important industry for Queensland. Certainly, restrictions on cargo capacity affect that. As we know, the primary way that the air freight industry operates is in the bellies of passenger aircraft. So those two things need to be considered together.
Senator BABET: Obviously you believe that we should be looking at open skies types of agreements going forward, and the government should probably enter into those. Do have some brief comments on the benefits of open skies? Obviously, lower airfares et cetera is one of them. Also, why do you think the government is not looking at open skies more seriously?
Mr Both: The policy decisions regarding whether or not it’s in the national interest to adopt open skies are government decisions. We’re advocating for open skies wherever it makes sense for our nation and, in particular, clarity on the decision-making processes and criteria used so that we can inform our own decisions and work with our airline customers to seek to maximise the opportunities to travel to and from Australia.
Senator BABET: Do you think that Brisbane Airport gets enough of a seat at the table when it comes to negotiating air service agreements?
Mr Both: It’s a complicated bilateral process. It’s between governments. Our job is to advocate for the interests of the people of Queensland and for export and tourism trade. So we’re going to fiercely advocate for the people of Queensland, and we see it is in the interests of Queensland that we have open skies and, in particular, that the decision be reviewed.
Senator BABET: Do you think that—
Ms Crowley: If I may, Senator, I’ll add to that. We think more broadly that, from Australia’s perspective, we are a country that is by and large a long haul flight from a significant proportion of the world’s population and that not every airline wants to fly to Australia. We think it is in the best interests of the country and that, to those that do believe they can provide a useful service both from an inbound and outbound perspective, we should have open arms in that regard. Senator BABET: Do you feel—I’d like some general comments again—that certain airlines get more of an influence over these kinds of decisions and twist the government’s arm, maybe?
Ms Crowley: I think it is inevitable, and probably not inappropriate, that the interests of Australian carriers are taken into consideration in these discussions and negotiations. We wouldn’t argue otherwise, but the aviation sector and the economy is larger than just Australian airlines. There are Australian airports, tens of thousands of people who work at our airports around the country and hundreds of thousands, if not millions, of people who work in the industries and sectors that rely on aviation, particularly international aviation. So all of those points and all of those interests ought to be taken into consideration—and no doubt are.
Transport Workers Union
Mr Michael Kaine, National Secretary
Senator BABET: I have a few quick questions. Mr Kaine, you recently had a big win against Qantas in the Federal Court. For those listening at home, Qantas was found guilty of illegally sacking about 1,700 workers. What is your opinion of Qantas in general after bringing this case against them but also now after finding out they are going to appeal the decision in the High Court? Any general comments about Qantas?
Mr Kaine: Actually, the decision two weeks ago was that appeal. Qantas did appeal the Federal Court decision—you are quite right—from 2022. That was heard in the High Court of Australia by the full seven justices of the High Court back in May. The week before last the High Court announced its decision. The High Court confirmed, seven justices to nil—that is, unanimously—that the conduct of Qantas essentially constituted the largest case of illegal sacking in Australian corporate history. As you can well imagine, our view about that conduct and the corporate culture which surrounded that conduct and has surrounded Qantas since Alan Joyce put his feet under the desk in 2008 is not a positive one. Alan Joyce since 2008 has deliberately decimated his workforce, fragmented it into 38 separate entities; grounded the company in 2011 to inflict the damage that he needed to show the Fair Work Commission was inflicted on the economy in order to end modest industrial action; froze workers’ pay and bribed them with one-off payments that they would never receive if they took protected industrial action to support their terms and conditions; and then, of course, during the pandemic sat next to Scott Morrison dictating public policy and illegally outsourcing 1,700 workers. This is a litany. This is the destruction, the decimation, of the national carrier by a greedy corporate dictatorship. We’re glad Alan Joyce is gone. We are willing to work constructively with the new CEO, but we would like to see board renewal. We think it’s time for Richard Goyder to go, for the board to spill and for us to have a worker representative on the board so that we can have a fresh start at Qantas.
CHAIR: Thank you so much. A final question before the break, Senator Babet?
Senator BABET: A final question. Mr Kaine, your union has also cited that complaints increased by about 70 per cent in 2022, with high cancellations, flight delays, lost baggage et cetera. Can you comment on this in terms of what this means in terms of Qantas’s performance as a major carrier in Australia domestically and internationally? Do you think that allowing other airlines increased access to Australia’s market would encourage Qantas to lift their game?
Mr Kaine: I think the key thing for us to focus on here is that we have to get worker standards back where they need to be, as the ASU has set out. You have to have a stable workforce and a workforce that is of a big enough scale in Australia to be able to support international flying and greater demand and supply in international flying. You don’t have that at the moment. We have already set out the reasons why. The reasons are that some foreign owned entities were not provided with JobKeeper and had to slash jobs. That was a previous government decision. Qantas, with the government standing on the sidelines at the time, pushed 1,700 workers out the door but actioned many more thousands of redundancies that now look to be massive overreach. We’re left with an anaemic workforce in terms of both the numbers but also the conditions that apply to those workers, which is not attracting the workers back into aviation that we need to have a stable workforce. Before we can have any discussion about how we sustainability have a larger footprint for international flying in Australia, we need to bite off the problem of rebuilding aviation jobs. The loopholes legislation does that, and of course putting in place an independent decision-maker would be greatly helpful as well.
Senator BABET: Thank you, Mr Kaine.
Australian Chamber of Commerce and Industry
Mr John Hart, Executive Chair of Australian Chamber – Tourism
Senator BABET: Thank you, Mr Hart, for appearing today. Your organisation has been quoted recently as saying that the decision to eject Qatar Airways could cost around $788 million in terms of forgone revenue. What could possibly be the reason behind such a decision? It isn’t to protect special interests, is it? Why do you think that is? Why would the government just decide to do something like that, in your opinion?
Mr Hart: I don’t know.
Senator BABET: Do you think Qantas could have been a power broker behind the scenes?
Mr Hart: I don’t know why the government would choose to do something like that.
Senator BABET: I don’t either.
Mr Hart: To our submission, that’s one of the areas that we’re asking for clarification on, which is, ‘Why?’ We’ve heard a range of ideas floated, but I can’t answer that question.
Senator BABET: Do you think Qantas has a cosy relationship with the government, from what you can see?
Mr Hart: I think the relationship between Qantas and the government is a very important relationship, and it spans across a whole range of different areas, different departments and different interests, not the least of which is the partnership that we have between Qantas and Tourism Australia, which is underpinning our Come and Say G’day campaign. So I think there are all sorts of relationships between the government and Qantas.
CHAIR: And ACCI and Qantas?
Mr Hart: There is no relationship between ACCI and Qantas
CHAIR: So you’re saying it’s just the Tourism Australia campaign?
Mr Hart: Australian Chamber—Tourism? They are not members of Australian Chamber—Tourism either.
Senator BABET: Do you think it was in the national interest to stop Qatar from getting more flights to come to Australia.
Mr Hart: I’m not in a position to assess the national interest—
Senator BABET: In your personal opinion?
Mr Hart: but I don’t think it was in the interests of the tourism industry.
Senator BABET: With the current, I guess, duopoly that we have at the moment, Australian consumers are the ones that are suffering the most from this. After the industry shutdowns that we saw recently, we’re now seeing less flights arriving on time, cancellations et cetera. The international situation is at least not a duopoly, yet fares do remain quite high in relative terms, even if allowing for inflation. I think that the federal government has decided to make the situation worse by restricting a competitor to Qantas from coming into Australia and getting more flights in and out. Purely in terms of competition and the best outcomes for consumers, do you think that was a good decision?
Mr Hart: In terms of outcomes for consumers, both in Australia and outside Australia, it’s clear that the decision has not led to a reduction in the price of airfares. We have estimated, in our submission, that airfares on those key routes in and out of Australia have around a 50 per cent premium on them now, compared to pre COVID. We’ve speculated that there could be an up-to-40-per-cent reduction in those airfares if there were additional competition across those routes. So, from the perspective of the opportunity to reduce that premium that we are currently feeling and both inbound and outbound passengers are paying, it has not been in the interests of consumers, inbound or outbound.
Senator BABET: Thank you. I have no further questions.
Mr Richard Barker, CEO
Queensland Airports Limited
Mr Adam Rose, Chief Commercial Officer (Gold Coast, Townsville, Mt Isa and Longreach)
Senator BABET: Mr Barker, your airport has recently been in negations with or has reached out to Qatar Airways to talk about increasing services into Cairns. Can you explain to us in simple terms how this will benefit your region in economic terms? For your airport, for the people that live in the area, how important is it to get more flights into Cairns?
Mr Barker: We have ongoing discussions with probably 15-plus airlines at any point in time. There is a conference, for example, in three weeks time in Turkey, where the aviation team will be talking to a long list of up to 30 airlines. If there is any interest shown in Australia and potentially Cairns, we have more detailed discussions, and these are often multiyear discussions, to ascertain interest. In the context of a wide-body flight— in non-aviation speak, that’s a big plane with two aisles—something that Qatar would use, an A350, would have 300 to 350 passengers. On an annualised basis, the economic return from something like that could be in the order of a couple of hundred million dollars. So they are very significant contributors to the local economy. We have had a couple of meetings with Qatar, but it’s a very long-term prospect, as they have many other cities, literally around the world, that they could choose to fly to. It was very pleasant, high level, but there are certainly no firm commercial negotiations taking place.
Senator BABET: Obviously, increased supply drives greater competition and ultimately puts downward pressure on airfares. What do you think are the main factors that potentially restrict competition in the Australian aviation industry, specifically in regional airports or areas like yours?
Mr Barker: The challenge historically has been that long-distance carriers with big planes generally need large population bases at either end to provide enough volume of customers, otherwise it’s largely all dependent on inbound traffic. Historically, services that came to regional destinations like Cairns—China Southern Airlines, for example—struggled to get the volume of passengers, so, ultimately, those services pulled out. Regional cities like us see opportunity as smaller aircraft to get improved range and improved economics. A good example is Virgin airlines just started a daily service to Tokyo with the 737 that was technically not possible with the previous generation. So that is going to open up much more sustainable development opportunities for midsized and smaller cities like Cairns, where we’re always going to struggle to have the scale to attracted large, long range, wide bodies.
Senator BABET: My next question is for Queensland Airports. Do you feel like your voice is heard by the government, both state and federal, or do you feel like you’re not getting the attention that you require? Mr Rowe: I think we have a very strong relationship with our state and federal governments, mostly in the regions of tourism and developments of our region and our products. We have an exceptionally close relationship with the Queensland government, and also through Tourism Australia and the departments. We’ve always found it a very beneficial and collegiate relationship.
Senator BABET: I’ll ask that same question to Cairns Airport. Do you feel like you’re getting a fair shake from the government?
Mr Barker: Very similar to Queensland Airports, we have a very strong working relationship with the Queensland state government, largely off the back of the air tracking aviation fund, which is obviously focused on the post-COVID recovery. So we have team members who pretty much talk every couple of days to members of the state government. At a federal level, we have found them supportive—under the previous government and continuing on with this current government. The Cairns region receives some additional funding to help with the restart of international aviation, and whenever we’ve reached out to members of the federal government we’ve usually received support.
Senator BABET: In your opinion, would you say that it’s in the national interest to increase the number of flights in and out of our country?
Mr Barker: Yes, I would. We know that there is strong interest from, particularly, Europe. When you look at Google search data for destinations like the Great Barrier Reef, we’re highly attractive. We know that seat capacity is not at the same level as it was pre COVID. So, using that as an example, increased capacity will lead to lower airfares. I think there is an encouraging trend where additional capacity is coming into the Pacific route from North America, and we’re reasonably confident that that will lead to lower airfares as well, which will stimulate the economy.
Senator BABET: Same question to Queensland Airports: do you think it’s in the national interest to see increased flights in and out of Australia?
Mr Rowe: I might give a slightly nuanced answer to that question. At an overall level, absolutely. More competition and more supply equals lower fares and an ability to meet the demand that we’re seeing. Where we do get into that nuance though is recognising the regional package and what that actually does for ports like the Gold Coast, where—similar comments to from our colleagues in Adelaide earlier—it does give us a slight advantage in terms of being able to attract carriers where there is a commercial business case to be made, so where we’ve got a market with enough demand to actually fill the new service coming in. That means we can see that direct benefit come in to regional Australia, as opposed to funnelled through a capital city and potentially some of that regional benefit lost to the capital region. That means, from our point of view, we’re strongly supportive of anything around bilaterals that can continue to promote diversification of services through regional Australia, provided there is enough market demand to actually serve that flight.
Senator BABET: I have one final question for Sunshine Coast Airport. With a smaller airport such as yours, are you aware of any anticompetitive practices that might be limiting flights into your airport?
Mr Norris: No, we’re not aware of any action that would be limiting that.
Professor Gui Lohmann, Cluster Leader:”The Future of Aviation”, Griffith Institute for Tourism
Senator BABET: Dr Lohmann, you mentioned before that the taxpayer keeps bailing out Qantas. Do you know roughly how much we’ve bailed out Qantas over the last decade or so?
Dr Lohmann: I would have to take that on notice.
Senator BABET: Could you, please?
Dr Lohmann: Yes.
Senator BABET: That would be great. Are you familiar with the open skies arrangements?
Dr Lohmann: Sure.
Senator BABET: Do you think that it would benefit the consumer, the industry, everyone, if we moved towards more of an open skies type of arrangement instead of bilateral arrangements like we have now?
Dr Lohmann: What we need to keep in mind is that Australia is ultimately at the far end of the destinations. If we were, for example, America—America in many ways could benefit from the opening of their skies, because they are so big and they are in the middle between the Asian and European markets. Depending on how airlines fly, they could fly to America, and that would facilitate in so many ways the competition. Again, we don’t have studies to show whether an open skies agreement or multiple agreements with several countries would be the way to go, but it definitely would avoid that mechanism that we have at the moment, which is a particular airline trying to go above and beyond the threshold and having a decision made by the government of the day, without clear evidence and without transparency. That is for sure. That does not mean that we shouldn’t explore other avenues. Another avenue could be what I said earlier on, which is saying: ‘Okay, we do have a mechanism in place, and that mechanism works in this particular way. If you want to go above and beyond your current allocation to the capital city airports, here is the avenue for you develop the Far North.’ By not having a policy to allow how we are going to operate above and beyond, we create an opportunity to negotiate on a case-by-case basis. More than saying, ‘This is the answer that we need,’ I think first of all we need to recognise that we don’t have an answer for that particular mechanism, and then we need to decide what is the best mechanism for us moving forward.
Senator BABET: I’ll move onto a different topic now. The transport minister, Minister King, has said that one of the reasons that Qatar was denied more flights into Australia was for the national interest. Can you, in your opinion, tell me what the national interest is, because I don’t understand what she means by that. Maybe, being an expert in the field, you might.
Dr Lohmann: I don’t want to put words in the mouth of the minister.
Senator BABET: In your opinion, why might limiting flights be in the national interest?
Dr Lohmann: Let me say this. When we have a carrier based in Australia, like Qantas or even Virgin Australia, that is owned by a majority of international investors, we definitely create a lot more jobs in the country than when we have a foreign carrier that is simply landing here, having a turnaround time of a certain number of hours and then flying out. Why? It’s because most of their employees, either on the ground or in the air, will be based in a particular headquarters that is overseas. Their flight attendants, the crew, will be mostly foreigners. In a few cases they could be Australians, but they’re going to be the minority. No. 1, clearly, the amount of jobs that a national carrier would generate is significantly higher than an overseas carrier. No. 2, the argument has always been made by many countries, including the US—and as a reference point we need to make sure that we emphasise that we have a very liberal arrangement in Australia to allow an overseas carrier to operate domestic flights in the country. The US does not allow that. China does not allow that. In the national interest we always said that the government could decide to block an asset of an airline and deploy this as they see fit. The US always used this argument of not allowing overseas carriers to own their domestic market, because the government can say, ‘I’m going to confiscate aircraft for national security,’ or for whatever reason. What we saw during the pandemic was something quite new. For the first time we had national carriers rescuing Australia in this time of crisis. We’re seeing a shift on that discourse to what it means to be ‘in the national interest’ to a national carrier. Without putting words in the mouth of the minister in terms of what she was trying to say, there’s no dispute that a national carrier base will generate more jobs and more taxes, and there’s also potentially an edge in terms of how we access the assets that they have for the country’s interest.
Senator BABET: Thank you. That’s it for me.