Why claims Australia’s aviation market is competitive don’t fly

afr.com:

Former Morrison government transport minister Michael McCormack had competition concerns at the front of his mind in 2018 when he set limits on Qatar Airways expanding in Australia.

Although McCormack eventually allowed Qatar to add some flights, he imposed safeguards to protect the market from the Middle Eastern carrier “dumping” cheap seats when he partly approved the request four years after it was made.

Virgin Australia CEO Jayne Hrdlicka. The airline’s IPO process hasn’t taken flight, raising questions over Australia’s aviation market. Dan Peled

This week, Transport Minister Catherine King said McCormack paved the way for her to deny Qatar the right to double its flights into Melbourne, Sydney, Brisbane and Perth, on national interest grounds.

But there are two key differences this time around: Qantas, a big beneficiary of the decision, delivered a record $2.47 billion profit last week, driven by profits from international routes, while five years ago it was returning to profit after a destructive domestic price war. The other difference is Virgin, Qantas’s only real rival in domestic aviation, is heading towards a float that appears to have stalled dead in its tracks.

Local fund managers have heard nothing from Virgin since it flagged in May that the process would get underway in earnest by mid-year, leading to growing speculation that its private equity sponsor Bain had planned for Qatar Airways to cornerstone the IPO.

This would damage Qantas for two reasons:

Qantas wants Bain tied up in Virgin for as long as possible because it thinks it’s a more economically rational sponsor than Qatar, but it also wants to buy time until the end of 2025 while it invests billions in new planes to feed the Project Sunrise