The easy way Aussie airfares could be halved in the future
A federal taskforce has found that there is a way for Aussies to pay half the amount on airfares, and that is by simply introducing some competition.
Early results from their research found that the "mere threat" of rivalry can be enough to lower airfares.
Just last year the Australian Competition and Consumer Commission (ACCC) found that the duopoly between Qantas and Virgin Australia was a key contributor to the "high prices and underwhelming customer service."
The early findings of the Competition Taskforce, which was set up last year, found that having flights serviced by three carriers instead of one can significantly reduce the cost.
When serviced by a sole carrier, airfares average 39.6 cents per kilometre - this drops to 28.2 cents a kilometre with a second rival, and to 19.2 cents a kilometre with a third.
Assistant Minister for Competition Andrew Leigh said that competition exerted "significant" downward pressure on airfares.
He added that a lack of competition in the aviation industry was problematic for a country that relies heavily on flying to connect cities to reach other parts of the world.
"For a resident of Darwin, it is often cheaper to fly from Darwin to Singapore than it is to fly from Darwin to Sydney, even although the international flight is longer than the domestic one," he said.
Leigh added that more than a dozen airlines operated in Australia before World War Two, but from the 1950s to the 1980s, a duopoly prevailed which kept prices high.
"Only with the deregulation of aviation in the late 1980s did flying become affordable for many middle-class families and small businesspeople," he said.
"Australia's aviation history shows the value of competition."
Just last year the aviation sector came under fire after the government's decided to block Qatar Airway's from running additional flights in Australia, with accusations that the move was made to protect Qantas from competition.
The federal government has since issued a review of the sector - including its competitiveness - and a white paper is expected to be released mid-year.
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