Qantas executives grilled about why regional airfares in Western Australia can be so expensive have rejected suggestions they are “gouging” residents, seeking to blame high regional airport costs.
A state parliamentary inquiry is examining why regional airfares are high and what the airlines and WA Government could do about it.
In an at-times heated exchange, Economics and Industry Standing Committee chair Jessica Shaw told Qantas executives that when people from across regional WA needed to quickly book a plane ticket for a family or health emergency, they faced “exorbitant fares”.
“It’s not a luxury for these people. It’s a necessity,” she said.
“Communities are hurting,” Ms Shaw added, asking the executives where the airline’s compassion and corporate social responsibility to these towns was.
Qantas Domestic chief executive Andrew David said that type of last minute, high cost airfare accounted for only 2 per cent of total travel.
But he said Qantas had sought recently to address the issue by announcing discounts of up to 30 per cent for people living in six regional centres.
Andrew David says Qantas has introduced discount fares for some regional passengers. (ABC News: Emily Piesse)
Qantas also argued its airfares to regional WA were lower now than in 2013, even though demand had dropped significantly with the mining slowdown.
Mr David said a key problem driving up airfares was that eight of the state’s regional airports were among the top 15 most expensive in its domestic network, with high maintenance, labour and other costs.
But Ms Shaw said the inquiry had heard in earlier hearings that airport costs were a very small proportion of plane fares.
Airports Association of Australia chief executive Caroline Wilkie later told the hearing airport costs made up only 5-13 per cent of regional airfares, and most regional airports operated at a loss.
Airlines making $7 per passenger: Qantas
But Qantas group executive for government and industry Andrew Parker did not accept the premise airport costs were an insignificant part of airfares.
He said Broome airport cost airlines double what Cairns did.
“So something is not right here,” Mr Parker said.
Mr Parker denied Qantas was making large profits in regional WA, saying airlines made only $7 profit per passenger per flight.
He said many WA regional routes were unique in that they were driven by the mining sector, with planes leaving Perth full and returning almost empty, and price discounting would not help to fill those return flights.
Committee member Stephen Price wanted the executives to give the inquiry detailed information on how fares were priced to help address community concern and anger.
“In their view, you are gouging them for everyday transport,” Mr Price said.
Mr Parker promised to give the committee more information if commercially possible.
Asked about the prospect of regulating failing routes, he said regulation had historically not worked and had even driven up prices.
Qantas argued for greater government investment to stimulate regional tourism, welcoming the Government’s $36 million pledge in last week’s budget to grow the industry.
It also wants a change in the way airlines and airport operators negotiated costs, to try and drive down what they pay.