Ambrose Bierce, whose cynicism supplies a hygienic cold wash, suggested that politics was always a matter of interests masquerading as a contest of principles. It involved conducting public affairs for private advantage. How right he was. One way of justifying such an effort is through using such words as the “national interest” or “public interest” in justifying government policies, from the erroneous to the criminal. They become weasel-like terms, soiling and spoiling language.
In various large-scale industries, companies can find themselves in the pink with governments keen to underwrite their losses during times of crisis while taking a soft approach to their profiteering predations in time of prosperity. The former is a policy that socialises losses, thereby throwing public money after deals gone bad; the latter is simply called, absurdly, the free market (another weasel term), where corporate gains are put down to entrepreneurial genius.
There is no evident sign of that genius in the global aviation market. In Australia, with a market typically in the stranglehold of a handful of firms, its absence is conspicuous. In one of the world’s most concentrated markets in the field, two operators reign: Qantas and Virgin. This classic duopoly has made the idea of reduced airfares a dreamy nonsense, an aspiration of the deluded.
The picture from an international perspective is also dire. Despite its appalling conduct over the last two years, be it towards ground staff, the gruff cancellation of flights, the stubbornness in refunding them, and the squeezing of extortionate fares, Qantas was privileged by a government decision to block an offer by another carrier to operate more flights into Australia. The move also had the faint odour of protectionism, made somewhat stronger by the A$2.47 billion in profits registered by the only aviation outfit that was generously cushioned by Commonwealth government funding during the COVID-19 pandemic.
In July, Canberra rejected a bid by Qatar Airways to add 21 extra flights per week into Australia’s three largest cities: Sydney, Melbourne and Brisbane. These would have supplemented the 28 weekly flights currently on offer. But it took till August for the government to cook up a feeble justification for having made a decision that will annually cost the Australian economy, according to one estimate, between A$540 million and $788 million.
According to federal Transport Minister, Catherine King, speaking to Parliament, “We only sign up to agreements that benefit our national interest, in all of its broad complexity, and that includes ensuring that we have an aviation sector, through the recovery, that employs Australian workers.”
Given that Qantas has relished sacking workers – in certain cases illegally – the comment was not only patently wrong but distasteful. But King seemed happy enough to continue distastefully, claiming that an agreement to furnish “additional services is not in our national interest, and we will always consider the need to ensure that there are long-term, well-paid, secure jobs by Australians in the aviation sector when we are making these decisions.”
The decision was at least perplexing enough to excite the interest of such Labor Party stalwarts as former Australian treasurer Wayne Swan. In his view, expressed as the party’s current national president, an “appropriate review” of the whole matter was necessary. (Reviews, in such cases, is code for identifying the damnably obvious.)
The rejection certainly drew baffled consternation from the inaugural chair of the Australian Competition & Consumer Commission (ACCC), Alan Fels. “It’s really a bad decision by any standards, especially if the government is talking about doing a competition review.” Prices, he noted, were already 50% higher than they had been before the pandemic. “They would come down a lot if Qatar entered.”
Much the same view was expressed by another former ACCC chair, Rod Sims. “What we see now particularly in Australia is very high airfares internationally and not enough capacity. If there was a time to allow new entrants in, this is it.”
The federal government’s decision is also a curious one in light of policies pursued by the State governments. Queensland, for instance, made a decision to attract airlines to the state drawing from a fund worth $A200 million. The scheme yielded agreements with some 25 international airlines.
While this was happening, the ACCC was marshalling its resources to launch an action in the Federal Court of Australia alleging that Qantas, has “engaged in false, misleading or deceptive conduct, by advertising tickets for more than 8,000 flights it had already cancelled but not removed from sale [between May and July 2022].” The ACCC is also alleging that, for more than 10,000 flights scheduled to depart between May and July 2022, the company continued selling tickets on its website for an average of more than two weeks. In certain cases, this persisted for up to 47 days after flights were cancelled. Not content with robbing actual ticket holders, the carrier is happy to advertise tickets for spectral journeys.
There is nothing to suggest that more flights will automatically reduce prices per se. As Karl Marx documents with expansive brilliance, markets tend towards concentration. In time, companies, much in the manner of hoodlums carving up neighbourhoods for their drugs trade, will divvy up their share and keep prices lucratively high. Miserable customers make for happy shareholders.
In the Qantas-Qatar Airways affair, the basic motivation to at least moderate the pricing regime in the short term is simply not there. Threatened, Qantas would have to respond. To date, given its traditional, enduring dominance, the approach of the Flying Kangaroo has been to stomp and box competitors into the ground, always aware that it has the backing of the Commonwealth government. That’s the sort of private enterprise its outgoing CEO, Alan Joyce, is most pleased with.
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