With Virgin Australia’s immediate future in the balance, they are real fears a one-airline monopoly will lead to sky-high airfare increases in Australia.
Australia’s competition watchdog says it will monitor the market carefully and warned Qantas it won’t hesitate to take swift action against anti-competitive tactics.
That includes raising fares on monopoly routes but also securing exclusive deals with airports or suppliers to restrict fair competition.
The government is expected to give the Australian Competition and Consumer Commission more wide-ranging powers to keep airlines in check and take action where necessary.
A new owner is being sought for Virgin Australia to ensure there is at least viable competition for Qantas.
Aussie PM Scott Morrison wants the ACCC to ensure a Virgin Australia 2.0 isn’t ‘crushed by any anti-competitive actions that may be put in place by another player in the market.’
"The general issue in these sorts of circumstances is where capacity is dumped on various routes to flood the market, force prices down and make it very difficult for a new player, who is, of course, usually very dependent on some early cash flow," said ACCC chief Rod Sims.
"If we are going to come out of this crisis in good shape, we desperately need two full-service airlines," Sims added.
