Push to scrap flight limits after controversial Qatar Airways call

The commission was one of several stakeholders to back easing restrictions in submissions to the Senate’s inquiry into the federal government’s decision to block Qatar Airways’ request for more flights into Sydney, Melbourne, Brisbane and Perth.

The move has been criticised by some as an attempt to protect Qantas at the expense of higher costs for Australian travellers and reduced spending by tourists.

Prime Minister Anthony Albanese and Transport Minister Catherine King have defended the decision as being in the national interest.

In its submission, the Productivity Commission reiterated calls to eventually remove all restrictions on international flights into Brisbane, Melbourne and Perth.

“As in all markets, restrictions on access to aviation markets can impede competition between airlines, reducing the range and quality of services offered, discouraging innovation and increasing prices,” it argued.

“These effects are ultimately felt by the community, particularly passengers travelling abroad, tourism operators and users of international freight services. 

“But the extent to which these effects are experienced depends on whether capacity limits are binding”.

The commission’s plan would leave only restrictions in Sydney as a bargaining chip for the Australian government in dealings with other countries.

The tourism chapter of the Australian Chamber of Commerce and Industry also backed opening up airports further, pointing to Tourism Australia analysis pegging flights to Europe as 49 per cent higher than before the pandemic.

It said Australia was falling behind similar markets in terms of access to international airlines, with so-called “open skies” agreements with just nine other markets, compared to dozens in the US, Canada and Singapore.

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“By denying Qatar Airways’ application, the government has restricted the number of tourists who can visit Australia and, effectively, inflated the cost of airfares,” Australian Chamber – Tourism argued.

“This is a significant deterrent for tourists to travel to Australia.”

While the government has argued the current situation allows airlines to fly into smaller airports, that has led to Qatar Airways operating “ghost” flights from Melbourne to Adelaide with few passengers on board to comply with the restrictions.

Dr Peter Forsyth, a consultant and former professor of economics at Monash University, said extra flights, such as those requested by Qatar Airways, would likely bring down flights in the short term.

“Most likely, the benefits to Australian travellers will be one of the biggest sources of benefit,” he told the inquiry.

“More competition in airline markets to Europe will bring down prices.

“There are some costs from outbound tourism where travellers switch (taxed) domestic trips to (mainly untaxed) international trips as a result of lower fares.”

The reduced airfares would likely reduce Qantas’ profits but, he argued, the drop would be “relatively minor”, with prejudices falling mostly on foreign airlines.

Forsyth cautioned the astronomical projections of potential losses from the Qatar decision should be taken with a grain of salt as actual “net” figures were likely 5-10 per cent of that gross spend.

Qantas did not make a submission to the inquiry, submissions to which closed on Monday ahead of upcoming hearings starting on Friday.

The Board of Airline Representatives Australia, which says it represents airlines operating about half of the international capacity to Australia, said it supported “open access wherever possible”.