• The ACCC has released a report on how it will be protecting competition within the airline industry.
• It will be monitoring Virgin, Qantas and Rex each month, keeping tabs on passenger numbers, flight capacity and revenue.
• The consumer watchdog is also looking out for anti-competitive behaviour such as “capacity dumping” and “predatory pricing”.
• Visit Business Insider Australia’s homepage for more stories.

The Australian Competition and Consumer Commission (ACCC) is keeping a close eye on the aviation industry.

The consumer watchdog released a report on how it is protecting competition among airlines as the pandemic continues to hamper the industry.

With the onset of travel restrictions, there was a 95% drop in the number of airline passengers compared to the same time last year, according to the ACCC.

Plus, the Sydney to Melbourne flight route, formerly considered the second busiest flight route in the world, experienced a massive 98% decline.

Major airlines Qantas and Virgin Australia slashed jobs in the wake of lower demand. Virgin Australia also went into voluntary administration before being saved by Bain Capital. However, under its new owners, it ended up having to axe its Tigerair operations.

On the other hand, regional airline Rex along with Alliance Airlines have plans to boost their domestic operations.

“COVID-19 has created some of the most difficult market conditions in Australian aviation history and it’s critical that when the industry starts scaling up domestic flying, any potential damage to competition is identified quickly and acted on,” ACCC Chair Rod Sims said in a statement.

Each month, the regulator will be monitoring flight capacity, passenger numbers and revenue data from Virgin, Qantas and Rex. Then it will provide quarterly reports to the government.

“We will act if we identify behaviour that damages competition, either arising from the conduct by airlines directly or through their arrangements with others,” Sims added.

“The ACCC will be reporting to government regularly and this will assist with informed policy development, particularly if we observe signs that competition in the sector is not effective.”

Among the list of anti-competitive behaviour the ACCC is looking out for is “capacity dumping”, where capacity is ramped up more than expected demand.

There’s also “predatory pricing” where an airline could drop their prices below cost. While this could be good for consumers in the short term, in the long term, it could mean a competitor bows out and the airline left standing could bump up prices again.

Another activity the ACCC is keeping tabs on is if an airline “hoards” an airport slot where they are allowed to take off and land from.

“Competition concerns may arise where airlines schedule flights for the purpose of retaining a slot but with no real intention of operating the flight, and likely cancelling the flight close to its scheduled departure time,” the report said.

“Conduct of this nature may raise concerns if it has the purpose, effect or likely effect of substantially lessening competition (that is, by preventing a competitor from accessing those slots).”

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