Showing posts with label Australia. Show all posts
Showing posts with label Australia. Show all posts

14 July 2025

“Too Big to Taxi?” – Is it Time to Break Up Qantas?


 

Let’s stop pretending Qantas is just a well-run airline. It’s not. 

It’s a state-protected cartel masquerading as a national icon, and it’s time someone said so — plainly and without genuflecting to the ghost of Alan Joyce. Oh yes and should we be talking about that horrendous data leak? Despicable behaviour.

Right now, Qantas Group — including its loyal attack pawn Jetstar — commands the air like a medieval baron controls trade routes. Not just with pricing power, but with institutionalized privilege that chokes new entrants, stalls innovation, and ensures that real competition is left to die quietly on the tarmac.

Let me explain and give a little colour.

Jetstar vs Virgin: A “Competition” In Name Only

Jetstar doesn’t just compete — it crushes. It’s the terminator of Australia’s low-cost aviation. When Bonza collapsed in 2024, Jetstar barely blinked. When Tigerair folded in 2020, Qantas actually bragged. Meanwhile, Virgin Australia, once a vibrant mid-tier competitor, was brought to its knees during COVID and only narrowly avoided death via a US buyout from Bain Capital (who did very nicely thank you).

Today, Australia’s domestic market is effectively a two-horse race: Qantas/Jetstar and a bruised but recovering Virgin. Together, they carry 94–95% of passengers. That’s not a market. That’s an oligopoly with press releases.

And if you’re a traveller? You’re footing the bill. The ACCC itself reported a 22.6% increase in airfares compared to pre-pandemic levels — and yet it seems strangely unwilling to confront the beast it helped fatten. And go check. The price to fly in Oz is one of the highest costs in the world. Indeed the prime trunk route is among the top 10 revenue earners on the planet.

Sydney Slots: Qantas’s House Always Wins

Let’s talk about Sydney Airport. For years, Qantas and Virgin literally ran the slot allocation system. They were the judges, jury, and executioners for who gets to fly and when. And wouldn’t you know it? They just happened to gobble up all the peak-time slots, leaving crumbs for challengers.

Even after the government finally brought in independent management (ACL UK) in 2025, the damage was done. The old slot hoarding practices had already kneecapped Bonza and blocked Rex from meaningful expansion on major trunk routes. 

The solution - Western Sydney still has only a handful of airlines committed. Last time I checked that did not include the incumbents at SYD. 

You can paint it any way you want but the obviousness of the situation is that Qantas used the system to entrench its dominance and weaponized Sydney’s constraints to shut out competition. 

Where Was the ACCC? Hint: Holding a Wet Noodle

The ACCC (Australia's competition "watch dog" deserves more than criticism. It deserves a formal inquiry.

For years, it’s watched the domestic aviation market collapse into a stitched-up duopoly and offered little more than toothless press releases. In 2023, it even praised Qantas for “strong results” while noting fare increases and “limited competition.”

Where was the watchdog when Bonza was being slowly suffocated by an inability to access slots or secure fuel contracts at competitive rates? When Jetstar kept growing unimpeded? When Qantas was making billions in profit off the back of a hollowed-out market?

The regulator also declined to investigate any bad activity at Bonza which was altogether rather fishy.

Incompetence is one explanation. Regulatory capture is another. Those profits are obscene.

Government Picks Winners: The Case of Rex

And then there’s Rex Airlines. A regional workhorse now being publicly cuddled by the government. Direct investment and operational flexibility make Rex look increasingly like a state-sponsored favorite — even as other airlines bleed out without a lifeline.

This isn’t just favoritism. It raises a brutal question: Was the government’s selective support part of the reason Bonza failed?

Bonza’s U.S.-backed owners had flaws, sure. They launched aggressively into the territory. But without equitable slot access, meaningful government support, or regulatory advocacy, their demise was not a surprise — it was a foregone conclusion. 

Break Up the Qantas Group? Yes. And More.

So what to do? Is it time for some better consumer thinking? Yup

Let’s be clear. The call to break up Qantas is not radical — it’s overdue.

Jetstar should be spun off, and slot allocation should be re-audited under public scrutiny. We need strict limits on market concentration by route. Western Sydney Airport must be a proving ground for real new entrants, not a second playground for the duopoly.

We also need the ACCC to grow a spine — or be replaced.

Final Thought

Qantas may have painted a kangaroo on its tail, but its playbook is pure corporate monopolist. It thrives on barriers, privileges, and inertia. As a consumer, you’re not flying the flag. You’re paying the price. The unions too have some responsibility, they have been enabled to get paid industry leading salaries to keep them quiet.

It’s time to stop treating Qantas like royalty and start treating it like what it is: too big to taxi, too arrogant to compete, and too protected to fail.

Suggested Reading:


04 September 2011

Great Buffet Quote: "Give me a good management team in a very difficult industry, and the industry always wins,"


The airline industry and indeed Travel as a whole is very difficult.I have been in and around it for all of my professional career now spanning more than 38 years. Holy crap has it been that long!!!!

Here is a great story that should give you a great sense of warmth. The end of Ansett is finally here. The last check has been paid and the staff got 96 cents on the dollar.

The lesson should be heeded over at Virgin Australia and also Air Australia (formerly Strategic).

Cheers

02 March 2011

The Case For Consumer Protection UK vs Australia


There is a certain amount of cheering going on as a result of the IRISH (that is not a misprint) beating the English at Cricket in the World Cup. The shock defeat was not due to just poor performance by the English - but rather a stunning performance by the minnows from the Emerald Isle. Congrats to the Pink Haired Mr Kevin O'Brien.

Given the relative approaches to cricket and travel from the British Isles to the Antipodes it is interesting to see the difference between the level of consumer protection provided in the Northern Hemisphere and that in the South.

An consultation paper entitled "Consumer protection in the travel and travel related services market" A Consultation paper dated March 2011
was commission by the Canberra Government and found that the regulatory cost of consumer protection and travel licensing in Australia is nine times the value of compensation paid to consumers each year, the independent report into financial protection has found.

In the UK the nature of the Consumer Protection has been in disarray for many years and successive governments have passed the buck. The result has been that the coverage for travel in the UK is poor and essentially the fund covering it is in deep deficit. Yet at the same time a string of Her Majesty's Administrations has taxed and levied costs against the air traveller. The current cost for a family of four to travel between the UK and Australia is close to a thousand pounds of APD - Air Passenger Duty. The latest proposals by HMG have managed to please just about no one.

So a little advice for the Government of Ms Gillard - free, no charge - don't change it. Keen the high level of the cost structure you have in place today. If you do you will be sorry. However there are some good recommendations in the report.

07 May 2010

Is a Fee a Tax? The Aussies now know


The Australian Federal Court ruled in court this week that a Fuel Surcharge is not a tax (even though it has been listed in the fare rules as a tax like item). As a result of the ruling - the Australian agents will get a windfall of commissions due during the time the surcharges were first filed.

Whether the ruling is appealed (highly likely) and it makes its way all the way up to the Australian Supreme Court remains to be seen. But we are now seeing that the issue of what is a fare, what is a fee and what is a tax will need to have greater scrutiny.

For the US environment - the USA Internal Revenue Service actually ruled on this last year, declaring that ancillary revenues are not a fare and not a tax. Thus opening up the opportunity for every jurisdiction where an airline product is sold (absent pure airline transportation fares) or delivered to be taxed.

As you can tell the airlines are none too pleased with this ruling. But unbundling the fare into these buckets of fees etc was hardly likely to escape the scrutiny of the lawyers and the tax authorities. Indeed anyone who unbundles their products will be under scrutiny. (er hummm GDSs - are you paying attention here?)

I would caution on too much celebrating by the agents at this point. They will of course have to pay their own tax on this!

Cheers

19 July 2008

OZ experiencing pain - The Duopoly are cutting

Both Qantas and Virgin Blue are experiencing a degree of pain in the economic downturn.

Qantas has announced plans to cut a further 1500 staff and ax both routes and ground aircraft. 767-200s are already gone, 18 737-400 Classics, and while that nicely painted Nalanji Dreaming 747-300 has long since gone the remaining 747-300s in the fleet are being grounded. Likely the JetConnect subsidiary in NZ will also get some cuts. Jetstar will see a slowing of growth. It has trimmed its growth to zero from 8% and will shut the US and London Call Centers. A savage cut will occur with 20% cuts in Admin and HQ staff.

For Virgin Blue soon to be Toll free (sic!) routes are being cut, staff laid off and I suspect some deliveries being deferred and aircraft being temporarily grounded. No word on their JV ultra low cost venture.

This is not just a problem for the USA folks

04 June 2008

Virgin Blue gets punished for straying from the fold

Virgin Blue was one of the original Low Cost Carriers. However it has strayed from the model and today - it is probably beginning to regret that.

In the last 3 years it has bloated up with the usual accouterments of the Full Service model to wit:

1. Lounges
2. Assigned Seating
3. GDS Participation
4. Multiple aircraft types
5. Interlining

There are more

And to cap it all - it has an MOU with Air Asia to develop a new LCC (conveniently called an ULTRA Low Cost Carrier.)

Well today it seems that this is now coming home to bite badly. JP Morgan has issued a pretty nasty coverage analysis that has been widely picked up down under. There is talk of the airline not surviving.

With Qantas cutting back significantly on both major brands (Jetstar and QF Mainline) Virgin Blue will have no choice but to follow suit.

It may just be me - but it seems that if you have the word Blue in your name, you start as a LCC and then order Embraer E-Jets you end up in trouble. But then this could just be coincidence.

Cheers

Timothy

14 February 2008

Open Skies - US and OZ but with a catch

Australia and the US have announced a new Open Skies agreement. But it comes with a little catch. It is bilateral only.

It is really interesting to see that one of the first truly large scale (seventh freedom) Open Skies agreements came between the UK and Singapore, it becomes effective March 30th. However this OZ-US arrangement will effectively hamper Singapore's efforts to open up SQ service from Oz to the US west coast. Ditto the UK will not be able to operate freely from US to OZ despite having operated 7th Freedom right services in the 80s and 1990s as a code share.

One of these days we will see the USA operate a truly Open Skies agreement worldwide with fully all freedom's One through Eight. So US Congress - put your money where your mouth is....

But then I am only an analyst.

28 May 2007

Virgin Oz - Splits 4 ways

Following in the footsteps of its arch rival Qantas - Virgin Blue is now the uber-brand for the Ozzie carrier. As it has slowly and relentlessly moved upmarket with its primary brand going after the corporate market - Virgin has seen its low cost roots (and routes) usurped by the upstart part of the Qantas group - Jetstar. With Tiger airways a mere few months away from starting domestic Oz routes - Virgin is not sitting still.

The company will now have 4 main brands:

Virgin Blue will be the premium branded service for Domestic routes.
Pacific Blue will be APAC regional routes including TransTasman services already in operation. The two newcomers will be the Long Haul (initially Trans Pacific) 777 service and the even sooner to be launched LCC player.
Commenting to Travel Weekly Australia at the Australia Tourism Exchange on Monday May 29th, Brett Godfrey, Virgin Blue CEO said "As we already have an Aircraft Operators Certificate (AOC), we can be up and running almost immediately". This pits Virgin Blue firmly against its rival. With some variation!

We believe that now the ownership issue is long resolved the company has been planning this expansion strategy for some time.

With Qantas itself in somewhat disarray following the recent debacle of the APA aborted tender and the subsequent resignation of 2 board members, we can see that there is life in the old dogs yet. Now why didn’t Ansett do this???? Answers on a postcard or email to me asap....

Cheers

Timothy

timothyo@t2impact.com