Chapter 2Air service agreements and the Qatar decision
2.1The committee received a range of evidence about Australia's approach to bilateral air service agreements in general. Commensurate with recent public interest and debate, many inquiry participants paid particular attention to the government's recent decision to refuse a request from Qatar to grant additional capacity under Australia's agreement with Qatar. This chapter reviews key issues raised in evidence as follows:
Australia's approach to negotiating air service agreements in general.
Examination of the recent Qatar decision.
Effects of the recent Qatar decision.
Transparency in negotiations and decisions about air service agreements.
Upcoming bilateral air service agreement negotiations.
Australia's approach to air service agreements
2.2The recent Aviation Green Paper, Towards 2050, provides an explanation of Australia's policy in relation to bilateral air service agreements:
The policy of successive Governments has been to negotiate bilateral agreements that provide 'capacity ahead of demand'. In a number of cases, Australia has secured an 'open-skies' style agreement with major aviation markets, which remove restrictions on flights.
2.3The 'capacity before demand' approach:
…has meant that airlines have the ability to plan to access future routes subject to their own commercial considerations and subject to meeting the safety and security requirements of both countries. In only a handful of cases, airlines are unable to access sufficient capacity under the bilateral arrangements to meet their commercial requirements.
2.4The Australian Government 'proposes to continue the current “Capacity ahead of Demand” approach, and negotiate “Open Skies” style agreements where it is in the national interest and can be bilaterally agreed'. As above, 'capacity ahead of demand' has been the policy of successive governments. The Green paper observes:
The current approach to bilateral air services negotiations appears well adapted to continue to seek benefits in the national interest including providing further opportunities for our aviation, tourism and trade industries and providing connectivity and competition benefits for passengers.
2.5A range of inquiry participants expressed support for the notion of 'capacity before demand', and some highlighted the benefits of 'open skies' agreements where appropriate. For instance, the Victorian Chamber of Commerce and Industry submitted that 'an “Open Skies” approach would help develop Australia's international air services'. The Australian Chamber – Tourism said that '[a]ny limitations on inbound and outbound capacity will stunt the growth of tourism and travel, through seat numbers and price competitiveness.' The Acting Chief Executive Officer of Melbourne Airport, MrJimParashos, drew a distinction between liberalisation of air service agreements and open skies:
Liberalised air service agreements, where capacity to airlines is provided well in advance so they can make informed decisions, are very important. It's not necessarily open skies. I think open skies is the ultimate goal, but we do think there is a long way to go in terms of capacity ahead of demand.
2.6The Australian Airports Association supported 'a more liberalised' bilateral air service agreement framework, and gave a rationale:
Liberalising [bilateral air service agreements] through an 'Open Skies' approach would help develop and maintain Australia's connectivity with the global aviation network. Certainty in aviation routes (capacity) are enhanced when bilateral agreements are negotiated ahead of time (demand). Additionally, capacity should be to any internationally capable airport, and not prescriptive on limiting capacity to any single airport. Forecasting bilateral capacity ahead of demand provides the certainty for airlines to plan procurement and deployment of aircraft as well as for airports to plan improvements to infrastructure and terminal capacity. Increasing competition also promotes best value for customers and allows international airlines to compete to provide enhanced service levels, reliability and connections for customers.
2.7The Australian Travel Industry Association supported the negotiation of agreements that provide capacity ahead of demand and said the 'most effective option to increase capacity and allow it to adapt to demand variation over time, is the negotiation of adequate capacity limits that offer significant margin for growth'. Regarding implementation of this policy:
Over the past decade, there are several examples of effective implementation of the 'capacity ahead of demand' policy – notably 'open skies' agreements for secondary hubs such as Malaysia and the Philippines.
However, as the COVID-pandemic recovery continues, a number of markets have remained near or at capacity over that period – Hong Kong, Fiji, Japan (Haneda) and Qatar.
2.8The Australian Travel Industry Association recommended that:
Australia should seek to increase the number of open skies arrangements with likeminded Indo-Pacific countries to increase competition to lower prices for Australians and international travellers who wish to visit Australia.
2.9Brisbane Airport Corporation in its submission noted the need for greater coordination and planning:
Better coordination between the Commonwealth's ability to negotiate slots in bi-lateral agreements and airport operating companies' abilities to offer incentives to airlines serving priority markets could provide greater growth in air services to Australia and reduce unproductive competition by jurisdictions for limited numbers of slots.
2.10In addition, Mr Ryan Both, Executive General Manager, Aviation, Brisbane Airport Corporation supported further liberalisation measures:
Certainly I'd reinforce the remarks about liberalisation. If a bilateral system is to be effective it needs to provide capacity ahead of demand so that carriers have multiple years to make decisions and planning decisions. These are not decisions that can be taken within a few months. In the situation where a carrier has an intent to operate, if we have some of the largest, best-known and well-respected carriers in the world wanting to operate to Australia, we should welcome that with open arms.
2.11Mr Matt Brown, General Manager, Corporate Affairs, Perth Airport also supported ‘any move to liberalise access’, noting that the post-COVID era has presented significant challenges for the airport.
2.12Sydney Airport observed that while Australia has seven open skies agreements, the United States has 130 such agreements and Singapore has more than 60. It spoke positively of the open skies agreement struck between Australia and China in 2016; since then:
…passengers doubled to around 160,000 per month, or 1.4 million annually, and incoming tourists each spent $9,200 on average, contributing over $12billion to the national economy. Airfares also decreased by 35% between 2015 and 2019, dropping by 15% in the first year of open skies alone.
2.13Sydney Airport's Chief Executive Officer, Mr Geoff Culbert, said that the airport is 'an advocate for further liberalisation of bilateral air rights' and suggested there is room to improve the current approach:
The bilateral process is reactionary, it's drawn out, and it tends to follow an increase in demand for capacity rather than creating supply ahead of time. Airlines make decisions about aircraft purchases and market development years in advance, and, for Australia as a market to be competitive relative to other destinations, airlines require longer-term certainty in accessing air rights on Australian routes. It's Sydney Airport's view that bilaterals should provide no less than five years of growth to provide airlines with certainty around future opportunities to operate services to Australia.
2.14The Board of Airline Representatives of Australia supported 'more open bilateral arrangements' and advocated 'as a minimum…for an even more forward-thinking approach [than] the government's current “capacity ahead of demand” stated policy'. It stated that '[i]nternational airlines provide significant economic value to the Australian economy – every new airline service brings new and additional inbound visitors to Australia, increases cargo capacity, and facilitates business and economic opportunities.' The Board also submitted:
Restricted bilateral arrangements add further risk to commercial decision‑making, and if there is little perceived prospect of change, can ultimately drive demand to other destinations who are competing with Australia for growing airline capacity.
2.15The Board of Airline Representatives of Australia further submitted:
As independent, economically rational and often global aviation service providers, [it] is self-evident to [the Board of Airline Representatives of Australia] that allowing international airlines to increase their services to Australia wherever possible, based on their calculated view of supply & demand but without additional regulatory restrictions, provides the greatest opportunity for them to initiate, build and operate additional air services which irrefutably provide a net economic gain for Australia.
2.16Qantas supported rejecting the Qatar request, presenting the following view:
After a COVID-related hiatus, the program of bilateral engagement on air services agreements is ramping up again. This is critical. While the bilateral system has limitations, it has effectively delivered growth and will continue to do so while the Australian Government explores opportunities for expanded liberalisation. Sequenced case-by-case negotiations, which balance benefits and opportunities, and focus on reciprocity, will enable the progressive liberalisation of air services arrangements that expand Australian airlines’ access to the world and allow foreign carriers to increase their access to Australia.
2.17When Dr Gui Lohmann was asked whether Australia should move towards open skies agreements, he suggested that it would provide a benefit though noted that other avenues could be considered:
…we don't have studies to show whether an open skies agreement or multiple agreements with several countries would be the way to go, but it definitely would avoid that mechanism that we have at the moment, which is a particular airline trying to go above and beyond the threshold and having a decision made by the government of the day, without clear evidence and without transparency. That is for sure.
That does not mean that we shouldn't explore other avenues. Another avenue could be what I said earlier on, which is saying: 'Okay, we do have a mechanism in place, and that mechanism works in this particular way. If you want to go above and beyond your current allocation to the capital city airports, here is the avenue for you develop the Far North.'
2.18Mr Peter Harris, a former Chair of the Productivity Commission, advised that negotiating air service agreements can be 'pretty smooth' in some cases but complex in others, particularly where there is not agreement about the need to expand between the two countries or between carriers in one or both of the countries. He explained that the carriers can influence negotiations:
It's not simply a question of the two governments agreeing or disagreeing because the carriers themselves have the ability to strongly influence parties and/or work actively to ensure that even if Australia wants to expand capacity—say we were doing a negotiation with the UK; if an Australian carrier doesn't want to see that expanded, it can encourage its UK alliance partner to ensure the UK doesn't offer us the capacity to expand. There are always, in the contentious ones, multiple-level negotiations going on.
2.19Mr Harris confirmed that agreements which allow more access do not automatically equate to more flights, because 'carriers are not obliged to use their capacity'. He further explained:
Because 'open skies' was a thing and everybody was in principle in favour—or the larger developed countries were in favour of this. But, surprisingly, every time we'd meet, we'd find that our version of 'open skies' didn't match the UK's version of 'open skies'. Then you'd be back to putting additional capacity into the agreement that your carriers could pick up and use if they so chose, but they weren't obliged to do so. Beyond that—I'll stick with the UK because it's a good way of clarifying it—if me and my UK counterpart negotiated a substantial increase in capacity and an Australian carrier wanted to use what we'd negotiated, they'd then have to get extra sourced at Heathrow. You get to use triumphalist statements about fantastic improvement in our national air services capacity at the bilateral negotiating level, but in practice you've still got to get the rights to land and to the park at times that will attract the sorts of passengers that you as a carrier are likely to have under your management.
2.20In describing the current situation, the Productivity Commission said '[a]ccess to international aviation markets is governed by a complex web of government‑to-government bilateral air services agreements'. It supported further liberalisation, submitting that:
…although Australia's international aviation policy settings have generally served Australia well, there would likely be net benefits to the Australian community from further liberalisation of international air services – specifically, from granting international airlines greater access to Australia's major airports (Brisbane, Melbourne, Perth and Sydney).
The recent Qatar decision
2.21This section reviews key evidence regarding the Government's recent decision to decline Qatar's request to increase capacity under the applicable bilateral air service agreement, as follows:
Background to the decision.
Timeline of the decision.
The basis for the decision.
The national interest.
2.22Subsequent sections examine evidence about effects of the decision.
Background to the decision
2.23Qatar Airways confirmed that its 'operations to Australia's main gateways (Sydney, Melbourne, Brisbane, Perth) are restricted to 28 weekly frequencies, with a cap of 7 weekly flights per gateway, an additional 7 weekly frequencies under the Regional Package and unrestricted capacity to secondary airports'. Qatar Airways added:
This is the lowest capacity entitlement awarded to any airline from the Gulf and the wider Middle East currently operating into Australia. In contrast, Qantas' partner Emirates Airlines is allowed to operate 105 weekly flights, Etihad Airways can operate another 56 weekly flights and Air Arabia can operate 7 weekly flights. Additionally, the carriers of United Arab Emirates can operate a total of 21 weekly flights under the Regional Package, and unrestricted capacity to secondary airports.
2.24Qatar Airways emphasised that while it is using its full entitlements, including the Regional Package entitlement, their regional competitors, who they identified as Emirates, a code share partner of Qantas, 'only utilise 77 out of the 168 available weekly flights to the main gateways for airlines of the United Arab Emirates, and zero frequencies from the 21 weekly frequencies available under the Regional Package and zero to secondary airports'.
2.25Qatar Airways also highlighted that it has a record of working very closely with Australian authorities 'during crisis situations, demonstrating Qatar Airways’ support for Australian nationals and residents during difficult times'. This includes during the COVID-19 pandemic, when Qatar Airways:
…continued operating to Australia, providing critical connectivity to Australians stranded all over the world, transporting medical supplies and Australian workers and supporting the supply chain through charter flights. We facilitated evacuations at the request of Australian embassies and consulates.
2.26According to Qatar Airways, in August 2022 the Qatar Civil Aviation Authority requested:
…28 additional weekly flights to Australia's main gateways with 7additional weekly flights under the Regional Package. This would offer more connectivity to Australian consumers and exporters, reaching a total of 56 weekly flights to the main gateways and 14 weekly flights under the Regional Package which is still far below the capacity entitlement of our regional competitors.
2.27The Chamber of Commerce and Industry Western Australia highlighted the following comments about Qatar's request by the Premier of Western Australia, the Hon RogerCookMLA:
At the moment we are particularly disadvantaged by the lack of competition in our domestic aviation market…
…
We think that more flights with Qatar is a great opportunity for WA, and we think they should have been backed when it came to their requests for extra routes in Australia.
…
I think blocking Qatar Airways around more flights to Western Australia is not in the interest of the West Australian people or the Western Australian economy.
2.28Mr Christopher Rodwell, Chief Executive Officer, Chamber of Commerce and Industry Western Australia, made similar comments:
It has shown over the long term its commitment to Western Australia. Throughout the pandemic, it was Qatar Airways that kept 777s in the air, on average four times a week, bringing in stranded Western Australians and other Australians, and flying out with the product of our exporters in the belly of their planes. It's difficult to conceive how there could be an immediate-term commercial case for providing that service during a pandemic. Frankly, Western Australia is indebted to Qatar Airways...
2.29Mr Jim Parashos, Acting Chief Executive Officer, Melbourne Airport also highlighted:
We also felt that, during the COVID period, when Victoria in particular went through a very difficult time, Qatar Airways really stood up to bring in medical supplies and to repatriate many Australians from far afield that other carriers didn't operate to. We thought it was appropriate to provide additional capacity.
Timeline of the decision
2.30The Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDCA) took the committee through the timeline in relation to the request from Qatar Airways. The request was received by DITRDCA on 22August 2022 and it was considered 'a straightforward amendment to the MOU which forms part of a treaty which establishes the capacity arrangements'.
2.31At the time the Qatar request was received, DITRDCA was ‘going through a process of establishing advice to government on our international priorities for the forward year’. This process commenced on 2August2022 and included writing out to 57 stakeholders. Mr Richard Wood First Assistant Secretary, International Aviation and Technology Services, DITRDCA explained:
Then in the case of Qatar the negotiating advice we were providing to government came very close after that process, so our follow-up stakeholder engagement was more targeted to the specific airlines, Qantas and Virgin, because the negotiations there were focusing very much on capacity arrangements and we already had advice from our stakeholders on the broader economic and other issues associated with our programs. In the case of some other negotiations we are looking at that come later in the year—Turkey and Vietnam have been talked about—we've gone out to the broader range of stakeholders. As I said, we have a list of 57 stakeholders we go out to typically, and where we get advice from others we can take that into account as well.
2.32In relation to the specific Qatar request, only Qantas and Virgin were consulted by DITRDCA. This occurred on 30September2022, with Qantas making a submission on 14October2022 and Virgin on 26 October 2022. When asked why these two airlines were particularly relevant, Mr Richard Wood, DITRDCA, explained:
They're the two Australian carriers that operate in the international market, with the exception of some smaller freight carriers, who don't operate on those routes. So they operate internationally and they're also, of course, the dominant domestic players as well.
2.33In January 2023, Virgin Australia met with the minister where the Qatar Airways application was discussed. Ms Carla Jayne Hrdlicka, Chief Executive Officer and Managing Director, Virgin Australia stated that she thought the application would be approved:
…Qatar also came up twice in conversations I had with the transport minister, Catherine King, during this period, once on January 2023 and again on 1 May.
Our January discussion was, as you would expect at the start of a new year, very much about the year ahead for the aviation industry and Virgin Australia after a really difficult and challenging 2022, as well as to understand the minister’s priorities for 2023. The Qatar bid was raised at the end of that nearly one-hour discussion, perhaps for five minutes at best. During this conversation it was indicated to us that the negotiating mandate for additional Qatar flights would be released to department of transport the following week.
2.34Ms Hrdlicka indicated that following her meeting with the minister in January2023, she was left with ‘a very clear impression that a decision to proceed was very compelling and imminent. Based on this conversation, I felt comfortable that Qatar would be granted additional air rights’.
2.35Ms Hrdlicka stated that the 'minister also said that my Qantas counterpart, then Alan Joyce, had heard that her department was recommending negotiations with Qatar should commence, and he was not happy and had asked to speak with her'.
2.36A DITRDCA brief, containing a ‘negotiating mandate’ in response to Qatar's request was signed by the department on 4January2023 and received by the minister on 9January 2023. A departmental official agreed with the description of the brief as 'a decision brief for the minister as to whether or not negotiations or consultations should be entered into with Qatar'. The official said 'essentially it's an approach—we call it a mandate, but it's an approach—as to how we should engage with that particular country'.
2.37Qatar Airways reported that its representative met the Minister for Infrastructure, Transport, Regional Development and Local Government at the 'Annual Prime Minister and Ministry Dinner 2023', which was on 1 March 2023 in Sydney 'with the PrimeMinister, Hon. Anthony Albanese MP and the Federal Ministry'. Mr Fathi Atti, Senior Vice President Aeropolitical and Corporate Affairs, Qatar Airways, said of this meeting with the minister:
I said: 'We ticked all the green boxes for our application. Minister, is there any progress?' But there was no indication from her side saying yes or no, but it wasn't negative at that time.
2.38On 31March2023, at the Qantas Gala Dinner, the Prime Minster, theHonAnthony Albanese MP, said:
And every day in that job, I knew if there was a crisis, anywhere in the world, whether it was a natural disaster or a violent uprising, I knew I could pick up the phone and Qantas would swing into action, getting Australians to safety.
2.39Qantas advised that the Board endorsed the decision to place the Yes23 logo on aircraft in April 2023.
2.40Ms Hrdlicka told the committee that Virgin began to have concerns in April2023:
In April, we began to hear noise that Qatar’s bid had stalled, and we knew that negotiations had not commenced, and we became concerned. In my 1May conversation with Minister King, which was primarily to update her on industrial relations, the minister indicated there was some challenge regarding the Doha airport incident of 2020, which we then discussed. This was a very different conversation from my conversation with the minister in January. I was now concerned the air rights may not be granted. As the weeks passed, that concern only grew.
2.41Due to growing concern about the Qatari request, Virgin Australia sought a meeting in May with the Prime Minister:
At that point I thought it appropriate to speak with the Prime Minister. We first made a request to the Prime Minister’s office for such an opportunity on 23 June, and we spoke upon his return from overseas on 13 July. As part of what was a broad-ranging and lengthy discussion reflecting the Prime Minister’s interest in and knowledge of the sector, I raised the Qatar issue. He, too, expressed concern about the 2020 Doha airport incident. I was surprised by this, given my understanding that there had been a diplomatic resolution on the issue between the governments of Qatar and the federal government and as there was a legal case being brought before the Australian courts by some of the Australian victims seeking financial compensation.
2.42Responding to questions on notice, Qantas advised that the date of 14August2023, for the event where Qantas confirmed its support for the Indigenous Voice to Parliament with Yes23 logos unveiled on three planes, was set in early July 2023.
2.43The minute received by the minister on 9 January 2023 was signed by the minister on 10 July 2023 and received formally by the department on13July2023.
2.44In a letter dated 10 July 2023 and dispatched on 17 July 2023, the minister wrote to five Australian women who were invasively strip searched at a Qatari airport in 2020, indicating that '[t]he Australian government is not considering additional bilateral air rights with Qatar.'
2.45The Prime Minister has said he was informed of the decision 'by the Minister for Infrastructure, Transport, Regional Development and Local Government after I had a discussion with the Virgin CEO, which was on 13 July'. On 13 July 2023, the Prime Minister spoke with the CEO of Virgin Australia by phone from Perth while in transit to Canberra. The Prime Minister stated:
In that call the CEO made representations relating to air services arrangements with Qatar. During that discussion I did not know that the transport minister had made a decision on 10 July 2023, a detail that was only advised to me after question time today. I once again confirm I did not speak to the former Qantas CEO before a decision was made.
2.46Prior to, and during this inquiry, the Prime Minister, ministers, government agencies and Qantas representatives have refused or been unable to detail the extent of any other conversations that took place between Transport Minister Catherine King’s office, the Prime Minister’s Office and Qantas government relations representatives, in advance of the minister making her decision. The Government and Qantas representatives have failed to respond satisfactorily to opportunities to provide such details through questions and Senate orders for release of documents in the Parliament, by the media, by Freedom of Information, or through direct questions at public hearings and questions taken on notice through this inquiry.
2.47On 18July 2023 the Government's decision was reported in media. This is the same day and the means by which Qatar Airways became aware of the decision. Qatar Airways received formal advice of the decision on 20 July 2023 in a letter dated 14 July 2023.
2.48Qatar Airways advised that on 16 August 2023 the Qatar Civil Aviation Authority sought a meeting with DITRDCA to understand the decision. On 27September2023, Qatar Airways told the committee that DITRDCA had acknowledged receipt of the request and 'will consider responding as soon as possible'. The following day, 28September 2023, media reporting indicated that DITRDCA will schedule a meeting with Qatari officials in relation to the decision as consultations are provided for under Australia's agreement with Qatar within 60 days and this was confirmed by DITRDCA at a hearing that day.
2.49DITRDCA confirmed that a review of the decision by government is allowed for at any time but this is a ‘matter for the minister’.
Consultation regarding the decision
2.50DITRDCA advised that '[a]pproval of mandates for each individual bilateral negotiation is a matter for the Minister for Infrastructure, Transport, Regional Development and Local Government.' On 11 September 2023 the minister, theHonCatherineKingMP, confirmed to the House of Representatives that the recent Qatar decision was her decision:
I am the transport minister. And—in exactly the same way that the previous transport minister had before him decisions about whether to increase Qatar Airlines' access under their bilateral agreements—it is the decision of the transport minister. These are very normal decisions that come before transport ministers. As I have said, again, I consulted with relevant colleagues, but the decision was mine.
2.51The minister also confirmed that her department 'undertook consultation with relevant aviation stakeholders, and I was well aware of different stakeholders' views when I took the decision.' The minister has told the House of Representatives:
As you would expect, my department undertook consultation with all relevant aviation stakeholders, and I was aware of different stakeholders' views when I took the decision. I do routinely meet with CEOs of all airlines, airports and peak bodies, and from my recollection the main people lobbying me about Qatar came from Virgin and a third party in my office on behalf of Qatar. The discussions I have had recently with Qantas have been about their concerns about our same job, same pay legislation…
2.52In September 2023, the Senate ordered several ministers to produce documents that could have helped explain the reasoning and process of the Government's decision. The orders varied but included briefing materials and other documents that informed the decision or were related to the Qatari request.
2.53In response, both the Minister for Trade and Tourism and the Minister representing the Prime Minister did not provide any documents, stating that none had been identified within the scope of the request. The Minister representing the Treasurer provided one document: a question time brief with redactions to information outside the scope of the order.
2.54Two ministers claimed public interest immunity in response to the orders. The Minister for Infrastructure, Transport, Regional Development and Local Government—who made the decision in relation to Qatar's request—said:
The production of documents falling within the scope of these orders would, or might reasonably be expected to, disclose the nature of bilateral relations with Australia’s foreign partners that we have given undertakings to protect. There is a public interest in not disclosing such discussions so the Government’s negotiations over air services agreements with a range of countries can continue unimpeded.
2.55The Minister for Foreign Affairs also referred to international relations, stating:
…disclosure of documents found to potentially be within the scope of the order would prejudice Australia's international relations. Disclosure of such documents would not be in the public interest as it would harm Australia's ability to negotiate international agreements between governments by undermining the trust and confidence in which such agreements are negotiated.
2.56These responses did little to illuminate the extent, if any, of consultations that the Minister for Infrastructure, Transport, Regional Development and Local Government may have conducted with her ministerial colleagues prior to her decision being made. However, the Minister for Foreign Affairs confirmed to the Senate on 11 September 2023 that she was consulted to some degree.
2.57In relation to consultation with other government departments on the decision, the Department of Foreign Affairs and Trade (DFAT) confirmed it was not contacted directly by DITRDCA about the Qatari request. Mr Jadwat, DFAT, said:
I don't know why we were not consulted in that sense in terms of a direct request. We offer foreign affairs and trade perspectives if requested. On this occasion, there was no direct request made to us. I'm not sure why there was no direct request made.
2.58In September 2022 DFAT was asked for advice by the office of the Minister for Foreign Affairs, after the minister was advised of the request in the course of engagement with the Australian ambassador in Doha. In addition, on 19January 2023, DFAT was asked by the office of the Minister for Foreign Affairs to 'provide input into a request that had been made by the department of transport, through Minister King's office, to Minister Wong's office for advice from DFAT'. This advice was provided on 24January 2023 via an email to Minister Wong's office from the Middle East Branch in the Middle East and Africa Division. DFAT was advised of the minister's decision on 12 July 2023. Treasury and the Department of Prime Minister and Cabinet confirmed that they were not consulted in relation to the Qatar decision.
2.59The ACCC confirmed that it was not consulted in relation to the Qatar decision, with its Chair, Ms Cass-Gottlieb, stating 'We have no role and had no role. We were not consulted. The minister may have taken account of competition or consumer questions without consulting the ACCC'. On this point, Mr Wood, DITRDCA, told the committee that:
…we tend to go to Treasury, as the agency that has got policy responsibility for competition, rather than the ACCC. We do engage with the ACCC on specific issues from time to time, or, indeed, they engage with us on issues from time to time. It tends to be more at the policy end in terms of setting our overarching policy approach.
2.60A range of non-government witnesses were also asked about their involvement in any consultation regarding the Qatar decision.
2.61Mr Stephen Byron, CEO, Canberra Airport confirmed that Canberra Airport was not consulted by the minister or her office in relation to the Qatar Airways request. Mr Brenton Cox, Managing Director, Adelaide Airport Ltd and MrAnthonyEdmondstone, CEO Airport Development Group (Darwin Airport) also confirmed they received no contact from the minister or her department. Mr Matt Brown, General Manager, Corporate Affairs, Perth Airport noted their disappointment in the decision adding that they have not had the opportunity to discuss it directly with the minister. Mr Brown indicated that the minister, her office and her department did not consult with them in relation to the decision. Mr Marc Devine, Chief Financial Officer and Company Secretary, Alliance Airlines, indicated to the committee that ‘I don’t think we’ve ever met the minister’ or anyone from her office or the department. However, he added that Alliance is part of the Regional Aviation Association of Australia based in Canberra which meets with ‘different levels of government all the time’ but they would be happy to ‘meet with anyone who wants to come and talk about aviation, our business or anything, really’.
2.62Mr Adam Rowe, Chief Commercial Officer, Queensland Airports Ltd, MrGaryAllen, Interim Chief Executive Officer, Sunshine Coast Airport, and MrRichardBarker, Chief Executive Officer, Cairns Airport, all confirmed they were not approached in relation to the decision. Mr Barker added that although he has not met with the minister he has exchanged letters in relation to another matter. Mr Rowe reported that, along with his CEO, he met the minister in June in Canberra to discuss a number of issues. Noting that he has only been in the role for five months, Mr Allen reported that he hasn’t met or had any communication with the minister. However Mr Allan added that he was ‘unaware of the last time that the former CEO did meet with the minister’.
2.63Ms Rachel Crowley, Executive General Manager, Communications and Public Affairs, Brisbane Airport Corporation, indicated that they have had one in‑person meeting with the minister in August 2022 but have seen her on a number of occasions since at various events.
2.64Mr Michael Kaine, National Secretary, Transport Workers indicated that they were not consulted on the Qatar decision. Ms Imogen Sturni, Branch Secretary, Victorian Private Sector Branch, Australian Services Union, also confirmed that they were not involved in the decision.
2.65Mr Simon Harrison, Chair, Australian Qatar Business Council also responded that they were not consulted by the minister or department on the Qatar Airways request.
2.66Regarding DITRDCA's consultation, Mr Wood gave further reasoning as to why only Qantas and Virgin were invited to submit about the specific request from Qatar:
I think one of the reasons we targeted Virgin and Qantas specifically is that it was an unusual request. Typically, when we have requests for negotiations or we make requests for negotiations we're looking at a wide range of issues, whereas in this instance it was very specifically about capacity issues, not about broader issues. It was a narrower range of issues on which to consult.
2.67Mr Wood further elaborated:
As I've indicated, partly because of the contemporaneous nature of it going out around the time that we'd gone out to stakeholders more broadly, several of whom had made detailed commentary in relation to Qatar. It was a fairly narrow request in its specificity. We had a significant amount of data and, as I've indicated, for other arrangements since that time—Turkey, Vietnam and a number of others as well—we've gone out to stakeholders more broadly, recognising both that they're broader requests and that time has moved on.
2.68Commenting on the consultation undertaken, Qantas submitted:
The fact that Qantas and other market participants are routinely consulted by government as part of this process shows that this is not a simple yes/no process, and that a number of broader market factors are considered. It also shows there is nothing unusual about Qantas (or any other interested party) being for-or-against the proposal. Each party is entitled to argue in their own interests, with government being the ultimate decision maker.
2.69In relation to engagement with government, Qantas made the following remarks:
There has been a lot of discussion before the Committee about Qantas’ engagement with the Federal Government. The underlying suggestion seems to be that Qantas is not entitled to put forward its position.
2.70Additionally, Qantas stated:
It is equally important that any party engaging with the Government or the Opposition be capable of doing so in strict confidence. It is our view that a critical hallmark of a robust democracy is the ability of parties to convey their perspective on issues to the Government and the Opposition without hesitation, and particularly without fear of (lawful and appropriate) confidential disclosures being disclosed inadvertently or deliberately. To accept otherwise is to place in real peril the Government and Opposition receiving candid and important information, perspectives and advocacy.
2.71Qantas took numerous questions on notice throughout its appearance before the committee. Qantas was unable to identify key dates or provide company employees at the hearing who were in a position to answer critical questions.
Basis for the decision
2.72The notion of the national interest has been cited by the minister as a basis for her decision regarding Australia's agreement with Qatar:
From the very start, I have said that we considered a range of issues in determining what the national interest was in this case. I know that there are some businesses and some airlines which would have liked to see me make a different decision, particularly those who have significant commercial interests at stake. I have not based this decision on any one company's or any one person's commercial interest but on the national interest. I am supporting recovery and sustainable growth in our aviation sector, at the same time doing my best to ensure that when Australians travel overseas they can have confidence in how they are treated.
2.73The Government has never specifically detailed the national interest grounds on which the request was rejected but has put forward at least 12 different arguments at various times for declining the Qatar Airways request and these are listed below:
Human Rights. The Minister for Infrastructure, Transport, Regional Development and Local Government, theHonCatherineKingMP, said:
So I would say to your listeners that it did [the invasive strip searches of women at Doha Airport] provide context to the decision.
Decarbonise aviation. Minister King said:
I want more capacity for people to be able to enjoy travel, but equally I want to be able to decarbonise the transport sector, aviation has a role to play in that as well, so there’s a mix of things I look at.
Protecting Australian jobs. Minister King said:
[W]e will always consider the need to ensure that there are long-term well-paid secure jobs for Australians in the aviation sector when we are making this decision.
Qantas’ recent purchase of new planes. Minister King said:
Decisions airlines have made, you know, decisions about what their capacity is based on, you know, there have been staffing issues, a whole range of things, but what you’re seeing is more capacity start to come back on. You’ve got our major airline, Qantas, has just purchased, you know brand new planes, that’s at a significant cost, and we’re going to see those, they’re bigger planes…But we’ve also seen a lot of the international carriers increase their capacity and starting to ask to increase capacity as well.
Threat to domestic aviation industry: The Assistant Treasurer, theHonStephenJonesMP, was reported stating that Qantas’ record $2.5 billion profit was 'a good news story' and that the Albanese government blocked extra Qatar Airways flights to keep the national carrier profitable. He said:
Having a national airline that occasionally posts a profit is not a bad news story. It’s actually a good news story.
Not in the ‘national interest’.
Minister King said:
In the case of the Qatar Civil Aviation Authority's request, I determined that it was not in Australia's national interest to grant their request for an additional 28 flights per week.
Senator the Hon Penny Wong, Minister for Foreign Affairs, said:
The first point I'd make is that the minister has made clear publicly that, first, she's the decision-maker and that she considers a range of factors when determining whether an expansion of bilateral air rights is in our national interest.
Qatar Airways’ unused access. The Deputy Prime Minister, theHonRichard Marles MP, said:
Well, there's a whole range of issues which go to any given agreement. The issue with Qatar specifically is they've got access to the Australian market right now, which they are not using.
Applications from other airlines to increase capacity. Minister King said:
We’re seeing a huge amount more capacity actually come into the international market. We already have Singapore Airlines, Emirates has already increased their capacity, we’ve got Hong Kong, I think Vietnam Airlines is also looking to increase its capacity in Australia and we’re making consideration of those requests at the moment and I see from reports in the media that Turkish Airlines are intending to eventually apply also to increase its capacity and we are constantly working on that. And we’ve got an open skies agreement with Singapore Airlines and continue to work with them in terms of their capacity.
The aviation market is already competitive. The Prime Minister, theHonAnthonyAlbanese, said:
We have the most competitive aviation market in the world, bar none.
What is happening in the aviation and international aviation market at the moment. Ms Marisa Purvis-Smith, DITRDCA, said:
As we mentioned—and we can go through—there were a range of reasons that the minister took into account for Qatar. The minister has indicated that she took into consideration a range of factors. They included what is happening in the aviation and international aviation market at the moment; what is happening with the COVID recovery; what is happening with the capacity coming back into the system, particularly from other aviation suppliers and where they are up to; and the impact on jobs in the long term. They were a range, but not the definitive full set, of factors that she took into account. Ultimately, it is a decision for the minister.
What is happening with the COVID recovery (see quote above).
What is happening with the capacity coming back into the system (see quote above).
2.74Mr Fathi Atti, Senior Vice President Aeropolitical and Corporate Affairs, Qatar Airways indicated that these reasons had not been put to them:
Not to our knowledge. Nothing was raised for Qatar Airways. It is not to our knowledge that it was raised even with our government.
2.75There has also been discussion about whether Qatar Airways can increase its flights to and from Australia under existing arrangements, even though Qatar's request for increased capacity was declined. On 4 September 2023, the Prime Minister, the Hon Anthony Albanese MP told the House of Representatives:
…Qatar Airways can add more seats into Australia today—right now. It comes from a complete failure to understand the way that the international aviation system works, which is through agreements between nations, not with airlines—agreements between nations are what occur. They are certainly welcome to do so, and they can fly as many flights as they like into Adelaide, into the Gold Coast, into Avalon, into Hobart and into Canberra, where there used to be international flights…They can also, today, change the 777s into A380s and fly more people in here…
2.76A similar viewpoint was presented by Qantas:
As has been subsequently reported, there is plenty of opportunity for airlines, including Qatar Airways, to add more flights to Australia under the current arrangements. The capacity [the Qatar Civil Aviation Authority] applied for represented an estimated two percentage points of incremental, annualised capacity. Qatar Airways currently flies a mix of Boeing 777s and Airbus A380s on its routes to Australia. If it opted to upgauge these to A380s, which it can under its current traffic arrangements, it would immediately increase the number of seats offered by 27 per cent.
2.77However, Mr Rob Wood, Executive General Manager Aviation, Sydney Airport, told the committee that Qatar Airways ‘only fly A380s currently’. Mr Geoff Culbert, Chief Executive Officer, Sydney Airport, added:
Pre-COVID they did fly double daily into Sydney, and from time to time they will toggle between, say, a 777 and an A380, but, at the moment, yes, it's one single A380.
2.78Mr Matt Raos, Senior Vice President Global Sales, Qatar Airways also commented on this matter:
We currently fly the A380, which is our largest passenger aircraft, every day to Sydney and Perth. With our current fleet, there is no more growth possible in those markets. We did note—I can't recall who was saying it—that in some of the media interest in this topic there were suggestions of, 'Why don't you just put A380s everywhere?' From an airline perspective, that's not necessarily the practical, optimal or ideal way of scheduling. What we see with the A380 is that, though it's very large for passengers, it's actually not an aircraft with the ideal mix between passenger and freight. In the belly of the aircraft is opportunity for bringing imports into Australia and the opportunity for Australian producers to export their product to global markets. A380 is not really the ideal solution for that; it has limited freight capacity.
The final point we would make is that the A380 is a large and four-engine aircraft. It has higher emissions per block hour than the small aircraft we would ideally put into those markets. So we see on balance the commercial angle from passenger perspective and from freight perspective as well as the concerns around decarbonisation in this industry, which would actually be better suited to increased frequency rather than changing everything to one particular aircraft type.
2.79Virgin Australia also commented:
An argument used to defend the decision is that QR should fly to ports outside of the Australia's largest four cities, such as Cairns, Darwin and Canberra (it does fly to Adelaide). This ignores the commercial and customer reality of supporting Australia's largest nodes of inbound and outbound passenger demand. Nonetheless, the argument is illuminating in that by calling for more capacity from Qatar into Australia, but just not on the four key ports, it reinforces the perception that the decision to reject QCAA's request was designed to protect the already dominant position held by the QF - EK partnership.
2.80In relation to using larger aircraft Virgin Australia submitted:
The argument that QR should 'upgauge' its aircraft flying to Australia to larger, older, less fuel efficient A380s: This is a somewhat spurious argument given QR already services Sydney and Perth with an A380, and a 8777 to Melbourne and Brisbane. Along with the more fuel-efficient two-engine B777's, QR has been investing heavily in a now 57-strong fleet of Airbus 350 (A350) aircraft, one of the most modern and fuel-efficient aircraft in global aviation. As its twin-engine long-haul fleet grows, QR can deliver a superior and more sustainable experience to the Australian aviation industry.
2.81Considering the reasoning provided by the minister, some inquiry participants discussed the notion of national interest and the grounds on which government decisions are made. For example, when asked to disaggregate component parts of the national interest in this circumstance, Dr Webber replied:
With these things, typically, inbound tourism gets the dominant weight. That's because it has such a pervasive effect. It affects not just the tourism sector, but the tourism and hospitality sectors earn money, and that's spent and benefits other Australians as well, so it has a wide-reaching effect. So the inbound tourism effect tends to get significant weight. The factors that affect the welfare of Australian residents tend to get the most weight. My understanding is that the impact on Australian businesses tends to get much lower or lesser weight. But if I were working out the national interest, I'd be trying to quantify all of those impacts I mentioned previously.
2.82Dr Peter Forsyth considered the economic dimensions of the national interest, and suggested that a 'pragmatic approach would be to conduct a cost benefit analysis of the pros and cons of liberalisation in a particular case'. He listed some of the 'key costs and benefits':
The benefits to Australian passengers from lower airfares;
The possible reduction in profits for Australian airlines such as Qantas;
The benefits from increased tourism receipts from inbound tourism;
The costs or benefits of the impact on jobs, in both the airline industry and the tourism industry and
The impact on greenhouse gas emissions from the airline industry and tourism.
2.83After discussing these factors in relation to the proposal to allow more flights for Qatar Airways, Dr Forsyth submitted there would be a clear economic gain in doing so:
On balance, while the gains from allowing Qatar more flights, as a result of benefits to Australians from lower fares and benefits from more tourism, the costs will mainly accrue to foreign airlines and their staffs. Australia will be paying less for its imports of airline services, which will lead to an increase in its National Income. From Australia's perspective, there will be a clear economic gain from additional flights by Qatar Airways.
2.84Dr Forsyth added that this does not mean liberalisation always supports the economic dimensions of the national interest, and observed that 'economic factors are not the only ones which need to be taken into account':
There is the 2020 event at Doha airport which is relevant, and there may be other factors which are yet to be revealed. The 2020 event is a serious one, but it may be possible to address this by diplomatic and legal means, to the satisfaction of those affected, clearing the way for the economic benefits from additional flights by Qatar to be reaped.
2.85Qatar Airways addressed the various concerns expressed in relation to the national interest in its submission. The airline highlighted how its application if approved would have supported Australia's national interest, including outlining the support the airline had provided to Australians during COVID-19, the potential boost for Australian jobs as a result of the application and additional transport through regional airports if the decision had been approved.
2.86Ms Jayne Hrdlika, CEO, Virgin Australia indicated that the organisation 'naively assumed' the government would approve the extra flights and Virgin remains 'confused' over the government's decision. Ms Hrdlika explained:
…to this day, there is still no coherent logic for this decision when all of the data suggests that supporting the Qatar Airways rights expansion is strongly in the national interest. It is certainly in the interests of consumers, the tourism industry and exporters.
2.87An issue Minister King states is 'context' for the government's decision were the events at Hamad International Airport in October 2020. Mr Michael Bradley, Partner, Marque Lawyers told the committee that his firm represents:
…five of the many female passengers on a Qatar flight in 2020 who were subjected to gross invasions of their bodily autonomy at gunpoint, including nonconsensual body searches that amounted to sexual assaults. Our clients have been unable to get any form of meaningful acknowledgement or accountability from Qatar and have been forced to seek redress through federal court proceedings against Qatar Airways and airport authorities, which my partner Damian Sturzaker is leading.
2.88Mr Bradley informed the committee that his clients do not support allowing Qatar Airways to expand their operations:
Our clients have expressed their concerns both publicly and directly to Minister King about the failure of Qatar Airways to accept any responsibility for what they suffered and about the continuing risk to female passengers who choose to fly on that airline. It is our clients' opinion that the airline has not demonstrated that it meets common standards of respect for human rights that all Australians would naturally expect of a company allowed to operate within our borders. Therefore, our clients support the decision to not allow Qatar to expand its operations here, although they and we have no insight into the reasons for that decision.
2.89Mr Bradley confirmed that prior to his clients writing to the minister on 27June2023 making representations regarding the Qatar Airways request, the government had not made contact with his clients. In a letter dated 10July2023 and sent on 17 July 2023, Minister King told Mr Bradley's clients that '[t]he Australian government is not considering additional bilateral air rights with Qatar.' Nonetheless, ministers subsequently suggested that Qatar Airways could conduct additional flights under existing arrangements. On 29August2023, the Prime Minister, the Hon Anthony Albanese MP, said:
Qatar can fly in to Adelaide, as many planes as they like, as big as they like. They can fly in other planes, which are bigger planes, that bring in more people. There is nothing unusual about a nation state not having access to unlimited flights wherever they like to go, whenever they like to go. Australia has exactly the same situation where Australian airlines are restricted from where they fly into. The former government made a very similar decision. And the Minister McCormack exactly as Minister King has.
2.90On 4 September 2023, the Prime Minister told the House of Representatives:
…Qatar Airways can add more seats into Australia today—right now. … They are certainly welcome to do so, and they can fly as many flights as they like into Adelaide, into the Gold Coast, into Avalon, into Hobart and into Canberra…
2.91On 7 September 2023, Minister King also stated:
Let me just say, Qatar could increase its flights into Australia today. It should be flying here into Canberra airport. The very reason we have four major airports and then we have regional airports, the very reason for that is we want to try and get international tourism into our regional markets. And Qatar could recommence flying back into this airport today. They could fly into Darwin. They could fly into Adelaide. They could fly into Cairns and they could fly into the Gold Coast and, as I said, into Darwin. They are choosing not to do so. They could also on the flights where they’re not flying the Airbus 380, increase passengers’ seats into those major airports immediately, and we could encourage them to do so.
2.92Mr Atti of Qatar Airways reported that to his knowledge, the Australian Government did not raise the October 2020 incident during negotiations on Qatar's request for increased air capacity. He added, '[i]t is not to our knowledge that it was raised even with our government'.
2.93Ms Hrdlicka, CEO, Virgin Australia, stated that it was during their second conversation on 1 May 2023 that the minister first raised the incident at Doha airport with her:
In my 1 May conversation with Minister King, which was primarily to update her on industrial relations, the minister indicated there was some challenge regarding the Doha airport incident of 2020, which we then discussed.
2.94Inquiry participants highlighted a range of different factors that could be considered in decisions on air service agreements, including the following:
Austrade confirmed that when providing input to negotiating mandates for Air Services Agreements, it:
…encourages a strong emphasis on the contribution the visitor economy makes to the Australian economy, particularly in regional Australia. This approach aims to ensure that enough capacity is negotiated to meet current and future demand from our key aviation markets as well as emerging markets, aligned with the Australian Government's diversification agenda.
The Victorian Chamber of Commerce and Industry supported a 'strategic approach' to bilateral air service agreements, which 'entails coordinated involvement of stakeholders from airlines, airports, governments, industry and tourism bodies and trade agencies'. It submitted that currently:
…stakeholders are engaged solely with the Government in a short period of time to suggest the air service destination and quantum for the next foreseeable period.
This process would benefit from a more strategic approach going forward, which would enable and incentivise stakeholders to take a more coordinated and proactive approach to attracting international carriers.
Brisbane Airport submitted that air service agreements 'need to be considered as part of broader Commonwealth migration, education, tourism and foreign policies'.
The ACT Government highlighted regional airports and submitted that bilateral agreements should:
…be structured to provide incentives for airlines to access relevant regional airports beyond the main international gateways. For example, through additional slots into major capital cities being contingent on flying into regional gateways, this would allow for increased competition and regional distribution.
Improving regional airports' access to international markets will benefit regional communities by growing trade, investment and export opportunities, improving access to labour markets, and supporting the tourism industry. It would also strengthen demand and growth opportunities for Australia's domestic aviation network.
Broome International Airport discussed the potential benefits of greater international connectivity from the Kimberley region, including for trade and tourism; it submitted:
We appreciate that Bilateral Air Service Agreements and their associated rights allow for opportunities to expand trade between countries and that these rights should be carefully determined. As an airport based in a remote regional location, we believe there should be some consideration as to how these agreements can assist in creating opportunity for improved connectivity and economic development of remote Northern Australia.
2.95Mr Dean Long of the Australian Travel Industry Association submitted:
What we would like to acknowledge is that the national interest for us is how we support Australian consumers and how we support local Australian businesses that not only employ Australians in retail shopfronts but also operate as home based networks. That's the national interest for us.
2.96Qantas submitted that ‘[a]n assessment of the national interest informs the decision making of both governments considering changes to agreements’ and:
National interest is a concept with broad application in state-to-state engagement and is necessarily fluid. Relevant considerations might include the ‘beyond’ rights on offer, the ability to code share, the adherence of the other country to international rules, freight rights, access to ground handling, airports and the ability to sell freely, rights of domestic domiciled airlines and their interests internationally.
2.97Mr Christian Bennett, Chief Corporate Affairs and Sustainability, Virgin Australia put forward the view:
I think the broad sense is that national interest will obviously reflect consumer benefit, will reflect broader economic benefits to Australia and then may be moderated by any broader national security, or other, considerations that could temper the other two elements. So I don't think there's an agreed aviation terminology for it. It's more individual perception.
2.98Qantas also noted that ‘Australia is not alone in hesitating to grant applications by the QCAA over the past few years’:
Most recently, Qatar Airways’ CEO has complained about the Canadian Government’s refusal to grant the airline additional traffic rights despite the fact it maintained services during the pandemic, saying: “It is distressing to me that the Canadian authorities are not providing us with fair allocation of traffic rights that they have given to our neighbours.
2.99Qantas submitted that ‘[t]he suggestion that the Government’s decision on the QCAA application may have been related to Qantas’ support for the Voice and the Yes23 campaign has no basis in fact and ignores Qantas’ longstanding commitment to indigenous reconciliation’.
Effects of the recent Qatar decision
2.100The following sections examine evidence about the effect of the decision on:
Australia's economy;
airfares and competition;
trade and freight; and
tourism.
Economic effects
2.101The Australian Chamber – Tourism submitted that although the Green Paper suggests a 'capacity ahead of demand' approach, it 'appears this has not been the case in the Qatar Airways decision, where demand outweighs capacity'. The Chamber also said that it:
…understands that the cost of the Qatar decision may be between $500 and $788 million in foregone revenue for tourism and travel. Another estimate puts the cost of the decision at up to $1 billion in lost income, when considering business travel and freight as well as tourism.
2.102A cost estimate was also provided by Professor Rico Merkert from the University of Sydney, who said he undertook:
…some modelling to estimate the loss to the Australian economy. I initially included price, income, cross-price and competitor reaction elasticities. But then I simplified my approach, as a back-of-the-envelope calculation arrived at roughly the same figure of A$1 billion per year.
2.103Professor Merkert further submitted:
In terms of a conservative estimate related to the loss of tourism dollars, Qatar Airways, last year, on average, brought in 330 passengers per flight. If you multiply these 330 by 21 flights per week, assuming that not all of the 28 frequencies would be used immediately, and then multiply that by 52.2 weeks per year, you get to roughly 360,000 passengers per year that would have flown into Australia.
2.104Dr Tony Webber, Airline Intelligence Research, provided further figures when asked what would have been the effects of agreeing to Qatar's request:
The favourable effects are that there would be a material improvement in inbound tourism, largely from Europe. That would be likely to be somewhere in the order of $1 billion, if you include multiplier effects. There would be a material reduction in airfares. I think airfares would fall, probably not as much as many think but by somewhere between seven per cent and 10 per cent, based on the capacity that's added to that market.
2.105Dr Webber clarified that the 'airfare reduction would benefit Australians travelling overseas as it would benefit Europeans travelling to Australia'. He also pointed to other effects, including a potential fall in yields of airlines that currently carry passengers between Australia and Europe. Dr Webber also suggested that an increase in international flights may have small knock-on effects on domestic competitiveness as about eight to ten per cent of international passengers would fly on a domestic leg.
2.106The Chief Executive Officer of Flight Centre, Mr Graham Turner, told the committee:
It is pretty obvious, we believe, it is in the national interest to approve those 21 extra flights, particularly, as was mentioned before, given Virgin's code share. Virgin don't fly internationally much, so they would get quite a bit of benefit out of the domestic on-travel, which would help their people employ more people in that. There's no doubt in my mind that economically it's in the national interest to approve those.
2.107Regarding a potential review of the decision, the Chief Executive Officer of Sydney Airport, Mr Geoff Culbert, proposed that 'a reasonable position would be that you review the use of the bilaterals running up to Christmas'. Mr Culbert suggested that '[i]f we haven't seen any additional capacity come on through the UAE then it would be appropriate to determine whether there's an opportunity for Qatar to fill that gap.'
2.108Dr Forsyth proposed that rather than a review of international aviation policy, 'what is needed is a rethink of what the national interest in aviation really is'. He suggested it 'would be worthwhile starting with a rethink of the Qatar decision'.
Effect on airfares and competition
2.109The committee understands that flights to the Middle East are a very important part of the aviation network connecting Australia to Europe.
2.110In the context of cost of living pressures, a range of witnesses emphasised that airfares, particularly on international routes, have increased. For instance, the Australian Travel Industry Association said data from industry ticketing systems show international fares from Sydney airport in 2023 are 'up to 99%higher than the same period before the pandemic'. It submitted:
Some of the highest price increases across classes include:
Sydney to Hong Kong - Economy - $853 one-way (+81 % increase)
Sydney to Los Angeles - Economy - $1254 one-way (+67% increase)
Sydney to Dubai - Economy - $853 one way (+64% increase)
Sydney to Dubai - Premium Economy - $2224 one-way (+99% increase)
Sydney to Doha - Premium Economy - $959 one-way (+72% increase)
Sydney to Singapore - Premium Economy - $1057 one-way (+59%increase)
Sydney to Doha - Business/First - $3165 one-way (+68% increase)
Sydney to Hong Kong - Business/First - $3692 one-way (+56% increase)
2.111Brisbane Airport Corporation also noted that airfares have increased since Covid:
We see airfare levels particularly to Europe, which is the subject of a lot of discussion in this context, are approximately 75 per cent above pre-COVID levels, which is very significant. For the majority of normal people who are price sensitive and care about the cost of travel to Europe, that's a significant block to tourism and a significant block to the capacity that's then available in the belly of those passenger planes for exports of Queensland produce.
2.112The Australian Travel Industry Association acknowledged that there are multiple factors contributing to price rises, but submitted that 'the current bilateral policy settings are having the impact of limiting new capacity'. When asked about the cause of price rises, one factor highlighted by the Australian Travel Industry Association's CEO Mr Dean Long was that there are currently '11 per cent less airlines flying to Australia'. The CEO of Flight Centre, MrTurner, also observed that 'airlines certainly are taking advantage of the fact that demand is exceeding supply'. Mr Turner reported that there is variation between routes and that 'it's mainly on that Middle Eastern route and to Europe and the UK that the airfares are relatively quite expensive'.
2.113Mr Turner offered his view that 'airfares are going to stay high for at least the rest of this year, and probably well into next year, significantly due to the demand and the capacity not being back on certain routes', adding that 'these high airfares won't go away unless there's more capacity'. Mr Turner also reported that the 'travel industry would love this decision to be reversed', and gave an example of how '[m]ore capacity means lower prices':
You may have noticed that Qatar now fly three times a week into New Zealand. When those three flights only were announced, the prices on a like-for-like, month-to-month basis in the same month—which was September—compared to September last year were down 10 per cent. We notice December is down 14 per cent. It's pretty clear evidence, we think, that more capacity will lower prices.
2.114Regarding airfare increases, the Australian Airports Association submitted:
A key driver of high international airfares is an undersupply of seats on international routes serving Australia. This is in part due to fewer airlines flying in and out of Australia and less capacity from airlines servicing Australia compared to pre-pandemic levels.
2.115Mr Christopher Rodwell, Chief Executive Officer of the Chamber of Commerce and Industry Western Australia, spoke about the 'Diversify WA plan' and said:
What underpins that is a flourishing aviation sector, and we're a long way from flourishing. We don't have enough flights, and the ones we do have cost too much. The fundamental antidote to this condition is more competition, not just in the international market but in our domestic market, whether that's interstate or intrastate. We should be concerned about how WA's regions badly need more competition and better prices when it comes to aviation.
2.116Sydney Airport reported airlines flying to and from the United Arab Emirates are 'only operating 84 of the 168 flights they are permitted, while Qatar Airways is utilising all of their permitted 28 flights and is operating at capacity (plus an extra 7 flying to Adelaide via Melbourne, which is permitted under the [bilateral air service agreement]).' It said that '[w]ith 50% of weekly permitted flights from the UAE not being utilised, while Qatar is prevented from increasing their capacity, consumers are paying the price with less choice and ultimately higher airfares.'
2.117Queensland Airports Limited suggested that more air services tend to result in lower airfares:
Typically, the more airlines that service a region or the higher the frequency of services, the lower airfares tend to become, driven by competition and economies of scale. In essence, the more aircraft seats, the lower the airfares, offering considerable economic and social benefits to the regions they support.
2.118The Chair of the ACCC, Ms Gina Cass-Gottlieb, submitted that competition issues should be 'one key area considered' with regard to the national interest. When asked whether additional flights by Qatar Airways into Australia have made flights cheaper for Australians travelling to Europe, Ms Cass-Gottlieb said '[i]n the usual course, more competition produces downward pressure on price.'
2.119The Australian Chamber – Tourism referred to price increases for fares between Australia and Europe and suggested allowing more flights by Qatar Airways would reduce these fares:
Carriers including Qantas acknowledge they will not return to full international capacity until at least March 2024. It is difficult to foresee an easing in prices in the immediate future without increased competition. Industry sources have suggested the additional flights provided by Qatar Airways could have reduced the cost of flights by up to 40 per cent.
2.120In discussing high airfares, Brisbane Airport submitted that it 'supported Qatar's application for an expansion of its rights under the relevant [air services agreement]':
The current aviation environment has been characterised by a very strong recovery in demand. The supply side constraints have unfortunately hampered the markets' ability to meet this demand. This has resulted in stubbornly high air fares and lack of access for passengers from key source and trade markets. A search of publicly available websites confirms that prices for international travel to and from BNE are around 75% higher than pre-covid. The solution to these problems is additional services from key carriers.
2.121Virgin Australia also highlighted that greater competition will result in lower airfares for customers:
By allowing QR [Qatar Airways] to expand its flights, the Federal Government will create more competition between carriers. Importantly, this competition would occur outside of the Qantas - Emirates partnership which, this month according to media reports, acknowledged that even with the introduction of an additional A380 EK service would have limited impact on airfares. To reiterate, lower airfares for Australian consumers and inbound tourists will accelerate by stimulating greater competition between carrier partnerships, not from within an already dominant partnership.
2.122Virgin Australia detailed the effect on its ability to compete:
As a code-share partner of QR [Qatar Airways], VA [Virgin Australia] is impacted by the Federal Government's decision not to commence negotiations with Qatar. This goes beyond a surface-level revenue potential associated with additional flights - the direct financial extent of which is in the $5mn - $10mn range per annum. Far more significant is the negative consequences of constraining growth which undermines VA's ability to compete with the Qantas Group.
2.123Professor Allan Fels AO emphasised that the effect of the government decision in relation to Qatar Airways ‘is certainly very protective of Qantas’, adding:
When we talk about protection, the most frequent scenario is that a business is in trouble, failing and making low profits and the government comes in to save it. You can argue for and against that. But, when a business is making $2.5 billion in profit, protecting it is a very different kettle of fish.
2.124In contrast to the majority of witnesses before the inquiry, Qantas did not support changes to the existing bilateral air service agreement settings with Qatar. Its CEO, MsVanessa Hudson, emphasised the importance of 'enabling the international market to recover capacity from the impacts of COVID' prior to altering the market settings through the introduction of additional flights by Qatar Airways.
Effect on trade and freight
2.125As Austrade confirmed, '[a]viation access for passenger movements also contributes to freight movement of Australian goods.' Several inquiry participants therefore highlighted how restrictions under Australia's bilateral air service agreement have affected trade, particularly producers in Western Australia.
2.126The National Farmers Federation drew attention to the value of Australian exports and submitted 'reliable, efficient and competitive freight to key markets is essential'. Moreover, 'air freight is particularly important to perishable agricultural industries', with the Federation submitting:
The Australian Government and the agriculture industry have spent significant time and effort building and expanding new markets for producers to sell product. It is imperative that the government support effective access to these markets to underpin diverse, premium markets for Australian producers.
2.127WAFarmers highlighted the importance of passenger flights from Perth to the Middle East and North Africa in order to move freight, particularly chilled lamb and beef. However, exports on passenger flights reduced during the COVID‑19 pandemic, and 'the failure to return to pre-COVID levels has impacted our high‑end export sectors'. WAFarmers advanced that 'any opportunity to increase capacity should be embraced by the Federal Government'.
2.128At a hearing, Mr John Hassell, President WAFarmers emphasised the reliance on reliable freight opportunities in WA:
WA is an export orientated state and relies to a much higher extent on reliable freight opportunities than the rest of Australia. In 2022-23, Australia exported $83 billion worth of agricultural products, over 70 per cent of our entire production. WAFarmers supports additional freight services because the increased competition and increased opportunities will bring the price of freight down and increase demand. Currently, the cost of freighting a lamb is about a dollar a kilo cheaper from Melbourne, even though Perth is four hours of flying time closer to the markets. This would also have the effect of greater competition for Australian products in the end point markets, as well as supporting profitability and supporting livelihoods of farmers, farm workers and employees along the supply chain.
2.129WAFarmers also explained that 'Qatar is the third largest market in the Middle East and North Africa for Australian chilled beef and boxed sheep meat, taking 8percent of beef and 13 per cent of sheep, at a value of $135m in 2021‑22.' It submitted:
Today, total capacity to the Middle East and North African countries (MENA) for sheep meat exports is down from about 160 tonnes per day to about 66 tonnes as at April 2023.
This means there remains extensive untapped market potential of 100tonnes per day, which is equivalent to 3000 lambs per day or around a million lambs a year.
2.130Mr Hassell told the committee:
Rumour has it that WA lost a big Middle East order because of the limited air space capacity out of Perth. Reliable airfreight is important, particularly to perishable goods, which have short windows for freshness. This has been shown to be an issue in Perth, where the freight is regularly bumped in favour of other goods due to space and price. This culminates in unhappy customers who sometimes refuse to pay due to delays. Costs are also borne by the abattoirs, who have no kill room because the freezer space has not been cleared, leading to wages being paid for vets and kill staff with no ability to process, so they're sitting around doing nothing.
2.131Mr Hassell suggested that the 'airline decision is definitely anticompetitive and needs to be addressed', adding:
It's certainly not only about the tourism aspects but also the all-important export dollar opportunity and our farming communities. It feels like there's an anti Western Australia sentiment in not allowing this to happen, and we call on it to be reviewed'.
2.132Mr Rodwell of the Chamber of Commerce and Industry Western Australia submitted that his organisation does not understand the reason for the decision to refuse Qatar's request and considers the decision is not in Western Australia's interests:
WA needs the federal government to understand the investment required in aviation to help our services sector recover and to regain—and, ultimately, capture more—market share from both domestic and international competitors. That is why we're disappointed that Qatar Airways had its application rejected to bring an extra daily flight into Perth, due to the positive impact that open air travel has on the WA economy. We simply don't understand the reasons given around our national interest. We're convinced that the decision is not in Western Australia's interest.
2.133Mr Rodwell further commented:
The more flights coming into our state, the more export and import opportunities open up and the more downward pressure there will be on freight pressures.
2.134The Australian Meat Industry Council reported that the Australian meat supply chain accounted for 'over $13.5 billion in value-add and $67.7 billion in industry turnover in 2020-21'. Despite geographic and other advantages Australia has in this industry, 'airfreight continues to present challenges', many of which 'relate to capacity constraints that remain following COVID-19 travel restrictions and reduced flight numbers'. It submitted:
In addressing these residual challenges, it is crucial that government ensure that it is facilitating and encouraging access for additional airlines and flight capacity to our nation. Action is this area will result in greater competition and greater capacity providing more options to exporters of time‑sensitive chilled meat at rates that facilitate access to critical diversification markets.
2.135The Australian Meat Industry Council also emphasised that:
…the Australian red meat industry's highest value export products, chilled meat products, are transported overseas exclusively via air freight as sea freight logistics options do not provide fast enough travel times for chilled product with time-sensitive shelf life. Meaning, access to additional air freight capacity would assist industry in delivering its highest value produce to our international markets.
2.136Ms Bonnie Skinner, CEO, Sheep Producers Australia also stressed the importance of flight capacity to be able to deliver sheepmeat products to the overseas market:
We're producing fresh, high-quality meat every week. We need the ability to be able to move that in a really time-sensitive manner and get it to exactly where it needs to go. We don't have the luxury of waiting, because of the perishability of the carcass product. It's not a vacuum packed process. It can't sit around and wait. If it does sit around and wait we end up looking at a massive food safety issue, so there's a high reputational risk in getting carcass airfreight wrong.
2.137Mrs Belinda Murray, Board Director, Sheep Producers Australia emphasised that, '[n]ot being able to move freight through and the uncertainty that's come from not being able to move product is having a huge impact on producers, not just in terms of their business planning, but also it's pushing quite a lot of animal welfare risk back on farm and making it very complicated in businesses which are, by and large, small family businesses and don't have a lot of financial or general capacity to take on a lot of risk'.
2.138Mr Hassell also spoke about the effects on farmers leading to a possible animal welfare crisis:
In the past, the supply chain has been efficient, and we've been able to move sheep off farms. At the moment, there are lambs that are being kept on farms to the point where they've grown past being lambs and they are now hoggets, so they're 40 per cent less in value than what they have been. There are farmers who are in dry growing conditions—I explained this earlier. They're keeping lambs on farm and having to feed them on grain, which is far more expensive than feeding them on paddock feed. So then they've got another year's worth of supply coming on without having been able to turn off the previous year's lambs. For us, it's a looming animal welfare crisis, and that mobilises you a fair bit.
2.139Mr Tony Seabrook, President, Pastoralists and Graziers Association of Western Australia, spoke about the challenges for freight from WA:
Extra cargo space…is vastly more expensive in the west, out of Perth, than it is over in the east. A processor I spoke to this morning said he could get another 5,000 lambs out of Western Australia, chilled, on an aeroplane, if the freight was there. He's paying $8 a head more out of Perth to the gulf than for stock out of the eastern states, so I think we've got a pretty good case here. There's more to say, but I think most of what I'm trying to say is, for heaven's sake, let's look at it from the point of view of the people being affected here rather those that have a peripheral interest.
2.140In relation to the government decision, Mr Seabrook called on the minister to reconsider the decision because:
…you're hurting us.' The sheep trade in Western Australia is really fragile at the moment. There are a lot of producers who've had enough. This is the final straw. They've had enough. There are ram sales where values will be way down. Producers are not prepared to mate. One said to me yesterday that he probably wasn't going to mate this year. I've never heard of that before. The tone deafness of this current federal government is beyond belief.
2.141While acknowledging that there are complex issues at play and not just the recent government decision, Mrs Murray submitted:
This is a very complex space. For an industry largely of small-business owners it is very challenging to operate within that complexity, especially at the moment. The complexity has increased hugely post-COVID. It's really disheartening when there are options such as this one, which we see could help us out in a very difficult position right now, and that difficulty is not being acknowledged.
Effect on tourism
2.142Evidence indicated that the tourism sector is still in recovery after the effects of COVID-19, particularly international capacity. Mr Tony Edmondstone, CEO, Airport Development Group, highlighted that as Australia is remote from the rest of the world, '[i]t's a high cost-to-serve market for international airlines to fly those sorts of distances; therefore, the more open we are as a country to enabling foreign carriers to connect to Australia the more significant the flow-on effects for tourism and then the economy as a whole'.
2.143Accommodation Australia highlighted the value of the accommodation sector to Australia's economy, submitting that '[a]ccording to the ABS Tourism Satellite accounts, for pre-COVID 2018-19 the accommodation sector gross value add was $8.58 billion, and direct value‑add to tourism of $6.2 billion.' In discussing the importance of aviation access, Accommodation Australia submitted that '[a]dditional airline access not only provides the competition that leads to cheaper airfares for tourists, but it also brings more tourists.'
2.144The Australian Chamber – Tourism provided figures about the value of the tourism industry more generally, submitting that prior to the COVID-19 pandemic:
Domestic and international tourism and travel spend totalled $166 billion and it was the fourth largest export sector. There was a direct benefit to the regions, with 44 cents of every tourism dollar spent in regional destinations, and the industry supported over one million jobs, directly or indirectly.
2.145The Chamber submitted that returning and visitor numbers remain below pre‑covid levels, and also stated:
By denying Qatar Airways' application, the Government has restricted the number of tourists who can visit Australia and, effectively, inflated the cost of airfares. This is a significant deterrent for tourists to travel to Australia.
2.146Dr Peter Forsyth clarified that the benefits of inbound tourism are often measured in terms of extra spending by tourists, but 'it needs to be taken into account that this is a gross measure of benefit, not a net benefit measure'. He explained that 'inbound tourists will spend money, but Australian resources will be needed to produce the goods and services they use'. He suggested that net benefits from tourism are 'more likely to be of the order of 5 to 10% of total spending' and that gross figures should be 'treated with caution'. Nonetheless, Dr Forsyth said that 'the gains from allowing Qatar more flights' include 'benefits from more tourism'.
2.147Professor Rico Merkert, Professor of Transport and Supply Chain Management and Deputy Director, Institute of Transport and Logistics Studies, University of Sydney, offered the following analysis in terms of lost tourism dollars as a result of the decision:
In terms of a conservative estimate related to the loss of tourism dollars, Qatar Airways, last year, on average, brought in 330 passengers per flight. If you multiply these 330 by 21 flights per week, assuming that not all of the 28 frequencies would be used immediately, and then multiply that by 52.2 weeks per year, you get to roughly 360,000 passengers per year that would have flown into Australian. If you assume that 50 per cent of those would have been inbound tourists, it gets you to 180,000 passengers, with most of them coming from Europe via Doha. European tourists spend, on average, up to $3,600 while here. I've conservatively assumed $3,500 for that. If you assume that they can stay here for up to a month—this number could actually go higher—then you get to a number of around $632 million.
2.148Professor Merkert added:
Qatar is currently operating A380s on the Doha-Sydney route and B777-300ERs on the Doha-Melbourne sector. Those aircraft have a capacity of 570 to 360 seats. If you assume that the average would be 439 seats instead of the previously assumed 330 seats, the above calculations would result in $841 million. Again, that is assuming 50 per cent of the passengers are tourists, mainly from Europe, but also from other parts of the world. If you increase that amount to 70 or 80 per cent, you would get much higher estimates for the loss in tourism income. But one could also argue that the load factors would not always be 100 per cent on each and every flight, so let's keep the estimate roughly at $800 million for tourism losses only. If one then adds additional loss because of the lack of business travel, which I estimate to be around $100 million, and the lack of visiting friends and family, connecting Australians with the world and with their families in Europe and the Middle East—which, to me, matters more than money—and freight, which is easily another $100 million, the figure could become A$1 billion relatively quickly.
2.149In summary, Professor Merkert submitted:
As noted, Qatar has asked for 28 flights, which would increase the figure stated above to more than A$1 billion in lost tourism income alone. Again, this discussion is focused on the Europe to Australia sector, a sector where having a more open approach to carriers coming in would, in my view, be helpful to the Australian economy, including Australians who want to reconnect with that part of the world at affordable airfares.
2.150Mr Matt Raos, Vice President Global Sales, Qatar Airways stated:
We believe that, if our application for additional Qatar Airways flights to Australia is approved, it would create an additional $3 billion of economic benefits to Australia over five years.
2.151Further analysis about the effects on tourism was provided by Dr Tony Webber, Managing Director, Airline Intelligence and Research Pty Ltd. As well as referring to 'a material improvement in inbound tourism, largely from Europe' which would likely be 'somewhere in the order of $1 billion, if you include multiplier effects', Dr Webber also said:
The other impact that you don't really hear about that often is the outbound tourism effect—not only will added capacity to that market bring more Europeans to Australia; it will mean that more Australians will travel to Europe.
2.152Dr Webber told the committee about a net tourism deficit:
We know quite recently that there are more Aussies travelling to Europe than Europeans coming here. Economists call that net tourism deficit. That means that, because there are more tourist Aussies going overseas than Europeans coming here, that particular tourism geography is in deficit. One of the more interesting parts of that deficit is that what Aussies spend when they travel to Europe is about double what Europeans spend when they travel to Australia. So not only is there what I call the volume effect, where there are more Aussies going overseas than Europeans coming here; there's also a price effect, where they're spending much more overseas than Europeans are spending here.
2.153In relation to the impact of the decision, Qantas noted that:
In the context of the QCAA application, it is worth noting that the vast majority of outgoing Australian travellers only use Qatar as a transit hub, with passengers travelling solely between Australia and Qatar averaging 245 per week before the pandemic. The Australia-Europe market is extremely well served via hubs other than the Middle East, including Singapore, Hong Kong, Bangkok, Kuala Lumpur, Guangzhou, Shanghai and Beijing. Of these, Singapore and China have Open Skies arrangements with Australia, and the others have liberal capacity arrangements in place. There are no restrictions on dedicated international air cargo services between Qatar and Australia.
In terms of inbound tourism, Qatar Airways carries a disproportionately high number of outbound Australian-based passengers. On that basis, suggestions that granting the QCAA application would have materially advanced the Australian tourism industry’s recovery are overstated.
Transparency in negotiations and decisions about air service agreements
2.154Several inquiry participants supported greater transparency in government decision making about bilateral air service agreements. For example, Dr Webber agreed that it would be useful for the government to provide public reasons when it rejects a request under a bilateral agreement. He said:
You'd just set out these component parts, which I set out before, and try to quantify them and say: 'This is how we've done it. These are the quanta, and this is how we made the decision.' I think it would be very useful.
2.155The Victorian Chamber of Commerce and Industry submitted it is 'crucial that specific airline decisions are made with transparency, and ensure that any untapped capacity in Australia's aviation sector is realised'.
2.156Accommodation Australia advanced that the 'Bilateral Agreement system needs to be more transparent'. Accommodation Australia submitted that it:
…recognises that some decisions will be in part or totally based on decisions that for security or foreign diplomacy reasons are not in the public domain. In these cases, the inability for the government to comment needs to be clearly stated, and not delivered through a range of confusing mixed messages as to reasons why decisions were made. Whenever possible, decisions should be fully explained, and subject to appeal.
2.157The Australian Chamber – Tourism discussed the recent Qatar Airways decision and observed:
…the Minister for Trade and Tourism has informed the Senate that he received no advice, briefings or submissions from his Department regarding the Qatar Airways application. Given this admission, it is difficult to understand how the recovery of Australian tourism and travel was adequately considered when the decision was being considered and ultimately made.
2.158The Chamber submitted that that bilateral air service agreements 'should be undertaken in a clear and transparent process, with a clear understanding of the guiding principles, as well as consultation and timeline for the agreements'. It also said that '[w]ithout knowledge of the reason for declining the application, it is difficult for a stakeholder to provide the relevant information for consideration and appeal the outcome as needed.'
2.159A series of recommendations on these matters were presented by the Australian Travel Industry Association, including in relation to clearly defining 'factors pertaining to a consideration of the national interest', assessment of 'the consumer benefit of each bilateral application' by the ACCC, and that key industry stakeholders 'be provided equal opportunity to review each bilateral request and make recommendations'.
2.160With respect to the process for considering changes to air service agreements, the Productivity Commission made a specific proposal; that:
…decisions and outcomes could be improved with greater use of transparent cost–benefit analysis, which includes a clear statement from the Australian Government about how it assesses the aggregate national interest and how any trade-offs are made when balancing the interests of different groups.
2.161In explaining this position, the Productivity Commission described various considerations relevant to the national interest:
Assessing the national interest involves weighing up a range of potentially competing costs and benefits for Australian airlines, tourism operators, air freight users, travellers and the economy more broadly. The ultimate objective of this process should be to enhance the welfare of the Australian community as a whole rather than to protect or promote any particular group, industry or commercial interests.
2.162Regarding the proposed use of cost-benefit analysis:
While the results of cost-benefit analysis may not be the Government's only consideration when determining whether to grant access to airlines under bilateral air services agreements, it is a vitally important input into the policymaking process and a powerful decision-making tool, particularly when it sets out unintended consequences and conducts sensitivity analysis.
2.163The Productivity Commission emphasised that '[i]mportantly, the full assessment of the costs and benefits of the negotiated outcome should be publicly released as soon as practicable'.
2.164DITRDCA spoke about the FOI process and exemptions, including ‘the detriment to the party providing confidential information to the department. It reads:
…financial loss…exposure to ridicule or public criticism to the affected third party.
2.165When asked about whether the release of information would make Qantas ‘look bad’, DITRDCA responded:
Well, I think, yes. It says 'or' and that puts them all under the and/or thing. They are all terms used in the Office of the Australian Information Commissioner's guidelines. Those terms are used. I suspect on transmission it might actually be better put an extra 'or' into the document, because they're not all necessarily relevant to each of the documents. It should really read 'financial loss or exposure to ridicule' so that we're not actually saying that 'exposure to ridicule' is one of the reasons for that particular…
Upcoming bilateral air service agreement negotiations
2.166Though the Government does not publish its forward negotiating program of bilateral air service agreements, the committee understands that parts of the aviation industry have been consulted about arrangements with Vietnam and Türkiye.
2.167Turkish Airlines' General Manager Australia and New Zealand, MrAhmetHalid Kutluoglu, confirmed that in the first week of August 2023 the Turkish Directorate General of Civil Aviation handed a request to Australia for increased capacity. He said that Australia's current agreement with Türkiye allows seven weekly flights but more are sought because 'without the freedom right and with only seven flights, it doesn't seem very possible to build a future plan'.
2.168MrKutluoglu also commented on the progress of negotiations:
We are still, till this day, expecting a reply from their side. It is important to have a quick response because in aviation, as you know, everything is about planning. We have to plan six to eight months prior—we need to make sales in order to start. Our first aim was actually to start in December, slowly sending direct flights into Australia for the first time. But now it doesn't seem possible to start in December, so we are expecting to finalise these talks with Civil Aviation as soon as possible so we can make a new plan for flights into Australia.
2.169Documents tabled at the committee's hearing appear to show that Turkish Airlines' General Manager Australia and New Zealand, MrAhmetHalidKutluoglu, wrote to the Department of Infrastructure, Transport, Regional Development, Communications and the Arts on 28November2022 requesting permission to fly services to Australia, and seeking to meet with senior officials in person. The meeting occurred on 14February2023, following which the department provided information as to the regulatory approvals that would be required, including from the department, the Civil Aviation Safety Authority and the Department of Home Affairs.
2.170This evidence indicates there is a longer period of discussion between Turkish and Australian representatives than disclosed by the office of the Minister for Infrastructure, Transport, Regional Development and Local Government, Catherine King, who told media in July 2023 that Turkish aviation authorities 'applied for initial discussions on updating air services arrangements with Australia earlier this month…'
2.171Qantas was certainly aware of the Turkish interest, having provided a submission to the Department of Infrastructure, Transport, Regional Development, Communications and the Arts two weeks earlier, on 7 July 2023.
2.172From the time of its initial request in November 2022, Turkish Airlines had originally planned to commence flights to Australia in December 2023, but found the bilateral negotiations to progress slowly; Mr Kutluoglu said '[b]etween the two civil aviation offices, the talking was going a bit slow.'
2.173When asked about whether the delays of concern were applications to the Civil Aviation Safety Authority, Turkish Airlines said:
But the waiting period wasn’t about these applications. The waiting period was about the bilateral submission or the bilateral talking going slow.
2.174From first approaching the Government in November 2022 intending to offer services in December 2023, agencies met in August 2023:
Well, I don’t know how long these things usually take out here in Australia. This talking, this writing, kept going between the two civil aviations. But our two civil aviations got together in the first week of August, as far as I know. From our perspective, we usually act a bit quicker. There’s a sense on our side that maybe, as our chairman said, issues developed.
2.175The Brisbane Airport Corporation commented on the need to provide clarity on the decision making processes and criteria used in order to inform decisions:
A more balanced, transparent and strategic approach to ASAs will not only benefit passengers, exporters and tourism businesses, but also ensure that this country remains well connected to the world's key aviation hubs, both now, and into the future.
2.176Mr James Goodwin, Chief Executive, Australian Airports Association, submitted:
Aviation has very long lead times—so better forward planning and better interaction in negotiations. If there is a concern, for instance, then being able to hear from different sides on how that might be resolved is all part of a negotiation process, and airports would support being part of that as early as possible because that assists with their planning, capacity and staffing issues that would go with that to help support the airlines.
2.177The Board of Airline Representatives of Australia commented on the proposals for both Vietnam and Türkiye:
Regarding Vietnam, it submitted that the limit on services 'needs to be lifted ahead of demand'. Currently, 40 of the available 42 weekly slots are used, 'leaving only 2 weekly slots which will be restricting schedule choice or optimisation decisions by any of the incumbent carriers seeking to increase their number of services, thereby supressing potential new service introduction'.
Regarding Türkiye, it suggested that the current limit of seven services per week is 'inadequate to encourage the long-term strategic investment required by particularly Turkish Airlines (IATA TK, ICAO THY) to start direct services'. It proposed that a 'minimum viable bilateral arrangement to encourage such services over the next 5 years would be an immediate lift to 21‑28 services/week to the major airports'.