SENATOR DEAN SMITH
SHADOW ASSISTANT MINISTER FOR COMPETITION, CHARITIES AND TREASURY
SENATOR FOR WESTERN AUSTRALIA
MEDIA RELEASE
31 July 2024
LABOR IGNORES COMPETITION ADVICE, MAKES REGIONAL AUSTRALIANS PAY THE PRICE
The collapse of Bonza and now Rex demonstrates Labor has ignored the many warning signs that Australia’s aviation industry needed urgent reform in order to sustain the green shoots of healthier aviation competition.
With the announcement of Rex’s insolvency, the Labor Government has now overseen an irreversible backwards step in the competitiveness of Australia’s aviation industry with the effects likely to be felt for years to come.
The Australian Consumer and Competition Commission’s (ACCC) most recent domestic monitoring reports into airline competition reveal the entrance of Bonza and Rex to the aviation market were providing consumers greater choice and access to a wider range of routes – including flights to under-serviced regional areas.
Rex had distinguished itself as the airline with the lowest cancellation rate, demonstrating its role in improving the competitiveness and consumer experience for air travellers.
The May 2024 report noted Rex had a cancellation rate of just 0.8% compared to Qantas at 3.8%, Bonza at 3.5% Virgin Australia at 2.8% and Jetstar at 1.5%.
Labor’s failure to act:
In February 2024, the ACCC emphasised the importance of supporting these new entrants by urging the Labor Government to adopt a suite of aviation reforms “as soon as possible”. These reforms included measures such as improvements to the Sydney Airport Demand Management Scheme and prioritising competition as an objective for the slot management scheme.
These reforms were first publicly canvassed by the ACCC in November 2023.
Labor ignored the urgency of these and subsequent calls from the ACCC, and they currently remain unenacted.
The failures of Bonza and Rex highlight the lack of required urgency within Labor’s Competition Review process in delivering timely improvements to aviation competition in Australia.
A significant rework of Australia’s aviation market is now required if this Government still hopes to deliver productivity and wages growth, lower airfares and deliver more aviation choice.
When Labor’s Competition Review was announced in August last year it was tasked with working closely with the Department of Infrastructure, Transport and Regional Development to consider competition issues in Australia’s aviation sector.
The Labor Government should immediately demonstrate the level of effort and attention its Competition Taskforce has put into developing a pro-competition agenda for the aviation sector and explain why the Competition Taskforce has been silent to date on publicly announcing its suggested reforms to the aviation industry.
Labor’s lack of attention to airline competition issues has failed every Australian airline customer, as well as the 600 employees facing potential job losses, and the hundreds of regional communities, business and community organisations dependent on regional air travel connections.
Comments attributable to Senator Dean Smith:
Senator Dean Smith, Shadow Assistant Minister for Competition, said “Labor has been asleep at the cockpit, and the collapse of Australia’s third largest airline should be a wakeup call to accelerate its competition review process.”
“Since their election, Labor has failed to implement the regulatory reforms necessary to sustain the entry of new airlines and provide enhanced aviation travel.”
“The collapse of Bonza and Rex has heralded further concentration of an already over concentrated aviation sector – where 93% of the market is controlled by just two airlines.”
“The events of this week demonstrate Labor’s loyalty program is restricted to protecting Australia’s aviation monopoly and not the aviation consumer.”
ENDS