Economics and Industry    Standing Committee

 MEDIA RELEASE

30 November 2017

 Chair: Ms Jessica Shaw, MLA

EISC Committee Report 2: PERCEPTIONS AND REALITIES OF REGIONAL AIRFARE PRICES IN WESTERN AUSTRALIA

The EISC has tabled in Parliament its Inquiry Report addressing the high cost of air travel in regional Western Australia.

Titled Perceptions and Realities of Regional Airfare Prices in Western Australia, the Report is the culmination of a five-month inquiry initiated because regional communities repeatedly voiced their concerns about the price of regional airfares, and were often met with a muted response from airlines.

The Inquiry attracted 122 submissions – a record number for a Legislative Assembly Inquiry – demonstrating the extent of community concern across the State. The Committee held hearings in Perth and six regional centres: Albany, Broome, Esperance, Kalgoorlie, Karratha and Kununurra.

Ms Jessica Shaw MLA, the EISC Chair said “few issues rouse community sentiment more in regional Western Australia than the cost of air travel. In these regions, air travel is not a luxury – it is an essential service, akin to buses or trains in the metropolitan area.

“We heard from people across the State about the impact high airfares are having on families, businesses and communities. I’d like to thank everyone who provided a submission, appeared at a hearing or attended our public forums for their candour and willingness to share their experiences.”

“Airline industry pricing is notoriously complex and opaque. Unlike most things Western Australians buy in their everyday lives, airfares can change by the day, if not the hour and prices escalate rapidly (and perhaps inexplicably), closer to the date of travel,” continued Ms Shaw.

“The Committee received considerable evidence suggesting that fares on unregulated routes are unreasonably priced. Successive witnesses from across the State used terms such as ‘price gouging’, ‘market failure’ and ‘duopoly’. The Committee also received academic evidence suggesting that fares are lower and less volatile on regulated routes.”

“We accept that WA is an expensive place to do business; that airlines are entitled to receive a reasonable profit for their services; and that there are considerable differences between regional routes. However, airlines could do a lot to improve community engagement and address perceptions that they are pricing unfairly. We’ve made a series of findings to that effect.”

“Unfortunately, the Committee encountered a general resistance from airlines to provide information that would have enabled us to draw conclusions regarding the reasonableness of fares on unregulated routes.”

“Based on the evidence presented, we are unable to find that market forces are working on unregulated route prices. The possibility of market failure or anti-competitive conduct is of significant concern. It is important that the State Government secure access to sufficient information to enable it to form a view and develop appropriate responses.”

“If airlines will not or cannot voluntarily provide information to the Department of Transport, the Committee has recommended that the Minister for Transport use existing licensing powers to obtain this information, in conjunction with strict confidentiality protocols, to protect commercially sensitive information.”

“The Committee considers that more information would considerably assist with policy development and its disclosure may, in itself, place downward pressure on prices,” Ms Shaw concluded.

The Report examines whether prices are in fact high; considers the impact these prices have on regional communities; explores casual factors driving high prices; and suggests steps that industry and Government might take to reduce airfares.

It makes a number of findings with respect to the impact of the Resources and Energy sector; whether airport charges drive expensive fares; the previous availability of ‘compassionate fares’; service quality and aircraft age; initiatives to promote regional tourism; options for additional routes and improved tender processes; and approaches to community engagement.

It also contains 13 recommendations to the State Government in order for regional West Australians to be able to access more reasonably priced airfares.

The report is available from the Committee’s web site at:

http://www.parliament.wa.gov.au/Parliament/commit.nsf/(Report+Lookup+by+Com+ID)/78DD9B9C2483008A482581E60028FF31/$file/EISC%20RAF%20Inquiry-%20Report%202-%20FINAL.pdf

The Committee Members will be available to answer questions on the Inquiry and its recommendations during a media conference at 1pm in the Legislative Assembly Meeting Room in Parliament House today.