The oil price is 32% off its peak levels, so Qantas has decided to reduce its controversial fuel surcharge on some routes . . . by a grand total of $5 which is less than 5%. But wait, there’s more: the surcharge — of $370 return for some routes — will remain in place for all flights to Europe, the US, Canada, South America, South Africa and India.

The recent surcharge reduction will only apply to flights to Asia, New Zealand and domestic routes. The pitiful reduction is akin to a millionaire leaving a $2 tip on a $500 meal.

As justification for the meagre decrease, Qantas executive general manager, John Borghetti claimed that “despite hedging and surcharges, [Qantas is] still under-recovering the cost of fuel price increases by hundreds of millions of dollars, even with the recent drop in jet fuel prices.”

However, Borghetti’s claim was contradicted yesterday a Macquarie Bank report which claimed that Qantas is on track a record profit figure of more than $1 billion this year. (Macquarie would have a fair understanding of Qantas: Chinese Walls aside, the bank is deeply involved with the potential PE buyout of Qantas with Allco Equity Partners and Texas Pacific Group.) Quite simply, Qantas (which operates in monopoly or duopoly markets for some of its routes) is creaming consumers, frequent fliers and travel agents with an unnecessary surcharge – all the while the ACCC has not so much lifted a finger to protect consumers and the tourism industry.

However, Qantas isn’t only hurting consumers, it is also doing its bit to damage Australia’s fragile tourist sector (which Crikey noted on Monday was the worst performing tourism market in the work). Yesterday, Tourism Minister, Fran Bailey, stepped in, calling on Qantas to increase capacity on the under-serviced Pacific Route. Currently, Qantas shares a very cosy duopoly with United Airlines over the Pacific and has intentionally kept capacity low to maintain a near 100% load. Capacity is so tight that some business travellers have not even been able to secure a business class seat to the US, despite the cost being around $16,000 for a return trip to New York (compared with around $10,000 for a return trip of a similar distance to London).

Unnecessary fuel surcharges, record profits, price gouging in a duopoly – where the bloody hell are you Graeme Samuel?

Peter Fray

Get your first 12 weeks of Crikey for $12.

Without subscribers, Crikey can’t do what it does. Fortunately, our support base is growing.

Every day, Crikey aims to bring new and challenging insights into politics, business, national affairs, media and society. We lift up the rocks that other news media largely ignore. Without your support, more of those rocks – and the secrets beneath them — will remain lodged in the dirt.

Join today and get your first 12 weeks of Crikey for just $12.

 

Peter Fray
Editor-in-chief of Crikey

JOIN NOW