U.S. Supreme Court Justice Louis Brandeis once famously said that sunlight is the best disinfectant. This sentiment seems to be relevant as Qantas, the Australian airline, faces increased scrutiny in a Senate inquiry. Even the early exit of CEO Alan Joyce has not alleviated concerns about the aviation sector. Justice Brandeis was known for his criticism of monopoly corporations, believing they were detrimental to workers and stifled innovation.
RMIT Associate Professor of Finance Angel Zhong points out that Australia’s airline industry resembles a cozy oligopoly, with a few airlines holding significant sway over the market. Domestically, Qantas and Virgin hold a staggering 95.1 percent market share. In terms of international flights, Qantas accounts for 26.1 percent while Virgin Australia holds 6.7 percent. There are concerns that the federal government’s decision to block Qatar Airways from increasing its weekly flights to Sydney, Melbourne, and Brisbane is anti-competitive. Transportation Minister Catherine King argues that the decision is in the national interest, but Dr. Zhong questions how it benefits the public when it seems to impede Qantas’ competition and increase flying costs.
Even before the Qatar Airways decision, Qantas had already faced consumer dissatisfaction. Issues with ticket credits and a high flight delay rate in 2022 have impacted customer confidence, leading to a decline in the company’s share price. Dr. Zhong emphasizes that accountability and transparency will be vital for the airline’s future. The appointment of CEO Vanessa Hudson presents an opportunity for Qantas to rebuild trust, engage with customers, and prioritize transparency.
To ensure long-term success, finance academic My Nguyen suggests a strategy that balances profitability with ethical responsibilities towards workers, customers, and the environment. Dr. Leigh, the minister in charge of competition, supports this view and advocates for addressing excessive market concentration that can harm consumers and stifle dynamism. A parliamentary inquiry will also provide senators a chance to weigh in on the matter.
Overall, the future of Qantas and the Australian aviation sector will be shaped by the outcomes of the Senate inquiry and the industry’s ability to address concerns of market concentration, accountability, and transparency.