The government is facing an investigation over not letting Qatar Airways run more flights into Australia. This is how it unfolded

A decision by the Australian government to deny Qatar Airways more flights into Australia “in the national interest” has been criticised by competitors, other businesses and the federal opposition, which has successfully established a parliamentary inquiry. 

This is how it unfolded.

October 2022: Qatar applies for extra flights

Qatar Airways’ chief executive Akbar al Baker says the airline wants more capacity, and bids for an extra 21 weekly flights into Australia on top of the 28 it already operates in major capital cities.

Mr al Baker partly blames Qantas for higher airfares:

“The largest operator in Australia has cut its flights to 50 per cent of pre-COVID level, more than doubled the price of fares to Australian people in benefit of the shareholders.”

Qantas writes to the government opposing the application.

Akbar al Baker applied for more flights and has repeatedly criticised Qantas for keeping airfares in Australia high. (Reuters: Hamad I Mohammed)

July 10, 2023: Transport minister rejects bid, writes to women stripsearched at Qatari airport in 2020

In a decision not announced for more than a week, Transport Minister Catherine King rejects the Qatar Airways bid on the same day she signs a letter to five Australian women who were invasively stripsearched at a Qatari airport three years previously.

The incident, which took place on October 2, 2020, at Hamad International Airport, involved all women on a departing flight being asked to disembark, then being allegedly stripsearched in an ambulance. 

They said at the time they were not told that a premature baby had been found in a bathroom stall. The five women Ms King wrote to are in an ongoing legal batter over the matter.

In the letter, Ms King says the Australian government was not considering “additional bilateral air rights with Qatar”.

The women had previously written to Ms King urging her not to grant Qatar Airways more capacity.

Ms King’s letter is not publicly revealed until September.

Prime Minister Anthony Albanese later says he did not know about Ms King’s decision for several days, until after he had met with Virgin CEO Jayne Hrdlicka.

Catherine King was responsible for the government’s decision.(ABC News: Luke Stephenson)

July 19: Decision announced

The government’s decision to reject Qatar’s application is announced.

The decision is immediately criticised by the Australian Airports Association, travel company Flight Centre, opposition MPs and Qatar Airways, with chief executive Akbar al Baker reported as criticising Qantas’s influence in the decision and pointing out that his airline had continued operating flights throughout the pandemic, unlike the Australian carrier.

Transport Minister Catherine King repeatedly says the extra flights are not in the national interest, and the decision was not a commercial one.

However, Liberal senator and Shadow Finance Minister Jane Hume says there is a lack of explanation from the government and claims the decision will hurt Australians through higher prices:

“As long as Qatar Airways is locked out of those additional routes, then airfares will stay higher; artificially inflated for longer.”

August 28: Assistant treasurer cites Qantas’s profitability; Alan Joyce fronts Senate

The Australian Financial Review publishes comments from Assistant Treasurer Stephen Jones that the government’s decision to block the extra Qatar flights was in the national interest and would help keep Qantas profitable.

The AFR quotes him as saying:

“We can drive prices down but if we drive them down to a level where it’s actually unsustainable to run an airline, instead of having two carriers we will design our markets in a way which will make it unsustainable for the existing Australian-based carrier.”

Later in the day, outgoing Qantas CEO Alan Joyce fronts a sometimes fiery Senate inquiry into cost of living.

He tells the hearing the national interest should be paramount and confirms the airline sent a letter to the government in October 2022 about Qatar Airways’ proposal, saying it would distort the market.

He does not go into specifics but does say the letter mentioned that airline capacity was returning, which would push down airfares, and that any short-term doubling of flights would cause distortion.

When asked about Mr Jones’s comments to the AFR, Mr Joyce says traffic rights are a bilateral exercise between countries:

“I think what the [assistant] treasurer was referring to is that Australia should protect its own national interest, and that is making sure you get reciprocal or other arrangements when you grant traffic rights.”

Loading…August 29: Virgin, Flight Centre insist ‘the demand exists’

Airline Virgin Australia — which has a flight-sharing arrangement with Qatar Airways — and travel company Flight Centre criticise the decision to block extra flights.

Virgin CEO Jayne Hrdlicka tells RN Breakfast it is “nonsense” to say the extra flights would distort the market because so little capacity had recovered since the COVID-19 border closures.

“You need to add seats where the demand exists, and the constraints are in these major capital cities.

“And that’s where the seats need to come and that’s what Qatar has applied for.”

Flight Centre chief executive Graham Turner, who has vocally opposed the decision since it was announced, agrees there is more demand than capacity, telling The World Today program: 

“You could argue that it could have been in Qantas’s interests, it certainly wasn’t in Virgin’s interest because they have a codeshare relationship with Qatar, so I just don’t think it was an argument that held any water.” 

He also says the decision could end up “blowing up on the government”:

“I believe the recommendation from the Department of Transport to the minister, Catherine King, was that it be allowed.

“But the story is that it was someone above her that basically had a captain’s call, presumably the prime minister.”

Shadow finance minister Jane Hume tells ABC News Breakfast that the rejection of the Qatar bid sounds like a “deliberate attempt to bolster up Qantas and keep prices higher for longer”.

August 30: Former ACCC bosses criticise decision; report says airline industry highly concentrated

Inaugural Australian Competition and Consumer Commission (ACCC) chair Allan Fells and fellow former commission chief Rod Sims say the decision to block extra flights from Qatar will hurt consumers.

Mr Fells tells News Breakfast the decision protects Qantas from competition and is “a really bad decision by any standards”:

“This is going to put up prices, or keep them up a lot. They’re 50 per cent higher now than before COVID. They would come down a lot if Qatar entered.”

Rod Sims says he struggles to understand the decision to reject Qatar Airways’ bid for extra flights.(ABC News: Amy Bainbridge)

Mr Sims tells RN Breakfast he thinks the decision “does hurt competition”:

“What we see now particularly in Australia is very high airfares internationally and not enough capacity. If there was a time to allow new entrants in, this is it.”

At the same time, a new report from non-partisan economic research institute e61 says the airline industry is one of the most concentrated in Australia and may have “imbalanced” power dynamics between airlines and their customers.

The report says more concentrated industries often have higher rates of consumer contraventions and there have been a large number of infringement notices and enforceable undertakings issued by the ACCC over the last 30 years in the airline industry.

But the report warns the high rate of infringement notices may be a result of more intense scrutiny, and it can not show a causal link between market concentration and consumer contraventions.

Industries with the highest levels of concentration tend to have a higher number of consumer-related infringements issued by regulators.(e61 Institute, “The State of Competition in Australia,” Research Note No.9, August 2023)

August 31: Jones says protection comments ‘misconstrued’

Assistant Treasurer Stephen Jones tells Sky News that “a viable airline industry requires a profitable airline industry”.

“I made the completely uncontroversial statement that the Australian government wants to ensure our airline industry is viable and competitive, that it’s delivering good services to customers.”

But he distances himself from the decision to block Qatar, saying it was made at Transport Minister Catherine King’s discretion and was not a decision taken by cabinet.

Stephen Jones says his comments about ensuring Qantas remains viable were misconstrued.(ABC News: Ian Cutmore)

Prime Minister Anthony Albanese says the minister’s decision was not “unusual”, and that Australia’s aviation market was strong.

“Qatar or anyone else, for example, has unlimited flights into all of the non-gateway airports around Australia … we have the most competitive system.”

September 1: Current ACCC boss agrees that extra flights would have reduced prices

The head of the ACCC, Gina Cass-Gottlieb, agrees with her predecessors that allowing Qatar’s expansion would have reduced prices, which she would have “welcomed”.

Asked on RN Breakfast if allowing the expansion would have lowered airfares, Ms Cass-Gottlieb offers the reply:

September 5: Opposition establishes inquiry

An opposition motion to establish an inquiry into the Qatar Airways decision squeaks through the Senate by a single vote.

The inquiry will examine the government’s actions relating to “any proposals received in the past 12 months for additional services to Australia’s major airports”, potentially setting its scope well beyond the Qatar Airways decision.

The inquiry’s committee will comprise three opposition members, two government members and two crossbenchers, one of whom will serve as deputy chair.

It will hand down its report in October.

September 6: Letter from Ms King to stripsearched women is revealed

The July 10 letter from Transport Minister Catherine King is publicly revealed.

Government sources insist the letter to the women was sent after Ms King made her decision on Qatar’s extra flights.

In parliament, Ms King says her department undertook consultation with relevant stakeholders in the aviation industry, and said she was aware of various views when she took the decision:

“I know there are some businesses and airlines that would have liked me to make a different decision, but I have not based that decision on any one company’s commercial interest, but on the national interest.”

September 7: Minister says stripsearch was ‘context’ but all departments were consulted

Transport Minister Catherine King says the stripsearch in Qatar was “context” but there was “no one factor that influenced” her decision to reject Qatar Airways’ bid:

“This is the only airline that has something like that that has happened. That is context that is there.”

The minister also says she was not motivated to protect Qantas and that she “received more lobbying on behalf of Qatar than I did on behalf of Qantas”.

She also rejects claims that the extra flights from Qatar would lower airfares, and points to both Cathay Pacific and Singapore Airlines increasing their capacity as evidence that competition in the market is improving.

Tourism Minister Don Farrell says Ms King had consulted all relevant departments over the refusal of the Qatar application:

“I can’t say that I specifically had a conversation with her, but I’m aware that her department made it clear that they were dealing with this issue and going to make a decision.”

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