High-f lyers in the hot seat
THE thorny issue of out-of-control pricing was raised at a national tourism conference in Canberra last week, with hotelier Ian Drummond questioning high-powered tourism chiefs about high domestic airfares. Qantas chief Alan Joyce was asked why passengers were being charged up to $450 one way in economy class from Adelaide to Alice Springs and up to $600 one way, also in economy class, on the Perth to Alice Springs route.
Regional Express (Rex) is also in Drummond’s sights. The hotelier and executive chairman of Australian Property Projects, owner of six hotels in regional areas such as Kangaroo Island and Alice Springs, reckons Rex charges up to $300 one way on 20-minute flights from Adelaide to Kangaroo Island.
But his main beef is the monopoly Qantas enjoys on the Alice Springs route.
‘‘When Tiger was grounded, Qantas had a monopoly,’’ Drummond says. ‘‘Tiger has come back into the market and is still not back on the Alice Springs route. I reckon this is price gouging . . . with that Perth one-way $600 ticket. I reckon you could go to Bali and back with a hotel thrown in for less than that. This is smashing tourism [to the Alice Springs region].
‘‘I am not asking Qantas to make losses. I just want them to review the Alice Springs route in terms of their stated position as the major sponsor of Australian tourism and their whole concept of the Spirit of Australia. ‘‘That means a fair go for Alice Springs.’’ Put on the spot, Joyce did not offer any quick fix, saying: ‘‘The aviation industry is facing a lot of head winds in terms of the economic situation.’’
Qantas flights from Sydney to London earn $1 million in revenue for the airline. ‘‘But,’’ says Joyce, ‘‘we’ll spend $500,000 of that revenue on fuel on that flight alone. Fuel is at record high levels. Like any business, Qantas needs to get its return on capital.
‘‘It has not gotten its return on capital since the global financial crisis. Everybody has to recognise the airlines have to make returns as well.
‘‘It’s right to say . . . that the returns we get don’t support the fact that we are charging exorbitant airfares. If that were the case, I would love it. But it’s not.’’
Drummond also put Tourism Australia managing director Andrew McEvoy under the spotlight over high prices. But McEvoy, billed as Australia’s most senior government tourism official, also defends the airlines as being ‘‘under such pressure from their shareholders . . . they need to make money’’. He adds that ‘‘the days of the airlines doing the right thing are over . . . [they] have to make money’’.