SYDNEY- Australian national carrier Qantas (QF) has claimed that implementing an automatic airline passenger compensation scheme would increase airfares. This statement directly contradicts evidence from similar programs operating successfully in Europe for nearly two decades.
The national carrier has cautioned Australian government officials that implementing an automatic compensation system for airline passengers would lead to increased ticket prices for travellers.
Photo: By Masakatsu Ukon – Qantas Airways, Airbus A330-300 VH-QPA NRT, CC BY-SA 2.0Qantas Higher Fares Amid Compensation
In a brief two-page submission filed just one working day before Qantas domestic CEO Markus Svensson’s Senate appearance, the airline argued against the Airline Passenger Protections (Pay on Delay) Bill 2024. This Coalition-introduced legislation aims to establish compensation mechanisms for passengers affected by cancellations, delays, and baggage issues.
Qantas stated in its submission-
“A ‘Pay on Delay’ scheme as foreshadowed in the bill will not achieve its intended outcome as it will do nothing to address systemic issues to further reduce delays or cancellations and will potentially increase costs — ultimately leading to higher fares.”
The airline’s opposition comes as the Albanese government has already rejected implementing such a compensation scheme in its draft aviation rights charter, a decision critics attribute to industry pressure from major carriers.
Photo: Aero Icarus | FlickrEuropean Evidence Contradicts Fare Increase Claims
Virgin Australia (VA) spokesman Stephen Beckett noted that compensation schemes in the European Union (EU) have resulted in approximately $9 billion paid to thousands of passengers annually. While cancellations have increased, European data shows that airfares have not risen as predicted by Australian carriers.
At the end of 2023, EU airfare increases remained below inflation rates, directly contradicting Qantas’ central argument against passenger protections. Consumer advocacy group CHOICE has warned that the government’s weakened charter may leave consumers in a worse position than they currently occupy.
Government Opts for Taxpayer-Funded Ombuds Scheme
Instead of implementing a compensation program funded by airlines, the government plans to introduce an aviation ombuds scheme at taxpayer expense. Both Qantas and Virgin have expressed support for this alternative approach.
Department of Infrastructure and Transport officials revealed that an internal recruitment process for an aviation ombudsperson is underway, with an appointment expected within weeks. However, the necessary legislation likely won’t reach Parliament until 2026, leaving passengers without enhanced protections for nearly another year.
Qantas Performance and Pricing Under Scrutiny
Qantas’ submission selectively highlighted improvements in on-time performance while omitting that these figures excluded Jetstar (JQ) operations. The Qantas Group continues to maintain cancellation rates exceeding 2% — more than double those at Virgin — in the three months leading to February 2025.
Opposition transport spokesperson Bridget Mackenzie questioned the airline’s trustworthiness, referencing previous scandals: “If Qantas was willing to knowingly sell those ghost tickets, why should passengers trust that the voluntary consumer protections that you offer in your policies are enough?”
Soaring Fares Amid Limited Competition
The airline’s warnings about potential fare increases come amid reports of extraordinarily high pricing, including $1,000 one-way Sydney-Melbourne economy fares and $700 one-way Sydney (SYD) to Coolangatta (OOL) tickets.
Recent data indicates Qantas’ international market share has stagnated as its long-haul fleet struggles against increasing competition. The combined market share of Qantas (QF) and Jetstar (JQ) rose only marginally to 30.8% in December 2024 from 29.6% a year earlier, highlighting the airline’s dependence on its protected domestic business for maintaining profits.
Photo: Qantas and JetstarAirport Revenues Soar Despite Fewer Passengers
The competition regulator has revealed that Australia’s four largest airports — Brisbane (BNE), Melbourne (MEL), Perth (PER), and Sydney (SYD) — reported record-breaking aeronautical revenues in 2023-24.
According to the ACCC’s Airport Monitoring Report, revenues increased by 24.3% to $2.6 billion “despite the four major airports collectively handling fewer passengers than before the pandemic.”
Despite chairman John Mullen’s recent assertions that CEO Vanessa Hudson represents a departure from former chief Alan Joyce’s management style, critics argue that the company’s actions suggest otherwise.
A former Qantas captain explained the shift in priorities–
“The old system at Qantas (QF) was a pyramid. First, you look after passengers, then staff, then executives, and then owners/investors. That’s been inverted. Now it’s all about investors, then executives. Passengers and staff at the coalface, the people who fly and maintain the planes and look after passengers, come a distant last.”
Rather than addressing capacity issues with new aircraft that could moderate prices, Qantas (QF) has purchased “mid-life” Q400 propeller planes to compete with struggling regional carrier Rex in South Australia, a move that Rex executives characterize as part of a strategy to eliminate competition.
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The post Qantas Predicts Higher Flight Fares Under Compensation Scheme 2024 appeared first on Aviation A2Z.
