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ACCC aviation industry activities and enforcement for 2016-17

25 October, 2017

Australian Competition and Consumer Commission (ACCC) reported the following aviation sector activities for FY2016-17:

  • Australian High Court found in Jun-2017 that price fixing agreements between Air New Zealand, Garuda Indonesia and other international airlines between 2002 and 2006 breached Australia's competition law. Action commenced against Air New Zealand in 2009 and Garuda in 2010. The ACCC alleged they colluded with other airlines on charges for fuel, security, insurance surcharges and a customs fee for the carriage of air freight from origin ports in Hong Kong (both airlines), Singapore (Air NZ) and Indonesia (Garuda) to destination ports in Australia. The ACCC was required to establish that the conduct occurred in a 'market in Australia'. The High Court unanimously dismissed appeals by each airline and held that all aspects of the market, including the presence of customers in Australia, need to be considered in deciding whether a market is 'in Australia'. At time of publication, penalties had yet to be decided by the Federal Court;
  • ACCC won a High Court appeal in Dec-2016 regarding Flight Centre's attempt to induce three international airlines to enter into price-fixing arrangements between 2005 and 2009 in relation to airfares offered online by the airlines that were cheaper than those offered by Flight Centre. The ACCC argued that Flight Centre and the airlines are competitors, a position the High Court endorsed. The ramifications of this case are "large" as it provides important guidance for the future application of competition laws in Australia to other situations where competing offers are made directly to consumers by both agents and their principals. It is likely to be particularly relevant when businesses make online sales in competition with their agents;
  • ACCC's Compliance and Enforcement Policy prioritised consumer guarantees and representations made by large companies about express and extended warranties, including in the airline industry;
  • ACCC's drip pricing project concluded in early 2017 with two penalty decisions in the airline industry. In Mar-2017 the Federal Court ordered Jetstar Airways and Virgin Australia to pay penalties for breaches of competition legislation in respect of drip pricing.The ACCC commenced proceedings against Jetstar and Virgin in 2015 alleging that, for specific advertised airfares, Jetstar and Virgin did not adequately disclose that consumers would be charged additional booking and service fees for bookings paid for using most credit cards or PayPal (Virgin also applied the fees to payments by debit card). In Nov-2015 the Federal Court found that Jetstar had made false or misleading representations about specific advertised airfares on its website in 2013 and on its mobile site in 2014. The Court found that Virgin had made false or misleading representations about specific advertised airfares on its mobile site in 2014. In 2017, when imposing the penalty against Jetstar, Justice Foster commented upon the importance of the use of penalties as a deterrent and noted that the penalty imposed on Jetstar was designed to discourage similar behaviour by others;
  • In Jun-2016 the ACCC received numerous complaints that airlines operating in Australia were pre selecting one or more optional extras during the online booking process. Where an option is pre selected, the cost of that option is automatically added to the fare unless a customer notices the option is pre selected and actively unticks it. This ongoing consumer issue in the online marketplace was addressed through an administrative resolution with Virgin Australia, Jetstar Airways and Tigerair Australia airlines;
  • ACCC released its airport monitoring report for 2015-16 on in Mar-2017. All four airports monitored - Sydney, Melbourne, Perth and Brisbane - received an overall weighted rating of 'good' for their quality of service. The report noted that the airports are collecting substantially more aeronautical revenue per passenger than a decade ago. The ACCC estimated that, over the past decade, these airports have collected USD1570 million (USD1213 million) more in revenue from airlines than they would have collected if average prices were held constant in real terms. The higher aeronautical charges have been used both to cover increasing costs per passenger and to grow airports' profit margins. The report also noted that profit margins for both car parking and aeronautical services remain very high. The report also commented on developments in relation to the proposed new airport in Western Sydney. It noted that a second international airport competing with Sydney Airport would yield significant benefits to both consumers and airlines. [more - original PR]

Cebu Pacific and Flight Training Adelaide launch pilot training due to 'overwhelming response'

24 October, 2017

Cebu Pacific launched (24-Oct-2017) a cadet pilot training programme in partnership with Flight Training Adelaide (FTA) to address the airline's expansion requirements over the next five years. The 56 week integrated flying training, flight theory and education course will create 240 commercial pilots who will join the carrier as first officers. The airline will send three batches of cadets p/a and select 16 candidates per batch. The programme is open to Filipinos who are college graduates. The first batch will commence the programme by the beginning of 2018. The entire programme will be financed by Cebu Pacific, which will invest USD25 million in the programme over five years, and successful graduates will pay for the programme through salary deduction over a maximum of 10 years. Due to the "overwhelming response" to the programme and "unprecedented traffic" on its website, FTA temporarily shut down the official website for the programme to enable infrastructure upgrades to increase the capacity of the website. [more - original PR] [more - original PR - II]

Lufthansa considers deploying A350 on Munich-Tokyo Haneda service

24 October, 2017

Lufthansa senior director Japan and Korea Donald Bunkenburg said the carrier is considering introducing the A350-900 on Munich-Tokyo Haneda service during winter 2017/18, replacing 281 seat A340-600 aircraft (Travel Vision, 22-Oct-2017). The carrier has not decided which A350 configuration aircraft it will deploy on the service. According to the CAPA Fleet Database, Lufthansa has 293 and 319 seat configurations for its A350s.

Fiji Airways considers new destinations; does not confirm Tokyo service

23 October, 2017

Fiji Airways executive GP corporate affairs Shaenaz Voss stated the carrier is considering a number of new destinations to add to its network, although none are yet to be confirmed (Fiji Times/Fiji Sun, 23-Oct-2017). The comments were made amid reports that the carrier is considering Nadi-Tokyo service from mid-2018 (Mai Life Magazine, 22-Oct-2017).

Iberia notes 'very good' LF on Madrid-Narita service during first year, increasing frequency in 2018

20 October, 2017

Iberia marked the first year of operation between Madrid and Tokyo Narita on 18-Oct-2017 (Aviation Wire, 18-Oct-2017). Sales director for Europe, Africa, Middle East and Asia Celia Muñoz said load factor on the service is "very good", adding frequency will increase from three to five times weekly from 20-Oct-2018 and it aims to increase to daily in the future. Ms Muñoz noted Madrid-Tokyo Narita passengers are made up of 55% Japanese passengers, 30% Spanish and the remaining 15% comprising other nationalities such as British, German, French, Italian and others. Japanese visitors to Spain increased 3.2% year-on-year to 299,000 in the first eight months of 2017.

Cobalt Air CEO outlines five year plan

18 October, 2017

Cobalt Air CEO Andrew Madar, speaking on CAPA TV, stated (Oct-2017) "what we foresee in about five years is a handful of long haul routes to China, India, South Africa and US and connecting them to shorter routes within Europe and Middle East". [more - CAPA TV]

Air France-KLM to receive 15 new Boeing 787s by the end of winter 2017/18

18 October, 2017

Air France-KLM reported (16-Oct-2017) it expects to take delivery of 15 new Boeing 787s by the end of the winter 2017/18 season. KLM is slated to receive 10 787s to serve 18 destinations, including Dubai, Mauritius, San Francisco, New York, Washington, Minneapolis, Calgary, Rio de Janeiro, Bogota, Cartagena, San José, Osaka, Colombo, Mumbai, Beijing, Hangzhou, Xiamen, Chengdu and Shanghai. Air France is slated to receive five 787s to serve seven destinations, including Cairo, Toronto, Boston, Panama City, Sao Paulo and Abidjan. [more - original PR]

South Australia notes Chinese visitor potential; cruise season to feature 67 cruise ship visits

17 October, 2017

South Australian Tourism Commission Rodney Harrex, via its official YouTube account, stated (16-Oct-2017) it was a "good" 3Q2017 for the state, while noting that the state welcomed 6.6 million domestic and international visitors in the 12 months to 30-Jun-2017. Chinese expenditure and visitor growth has been "phenomenal", with Mr Harrex noting that China is now the second largest visitor market for the state. He welcomed the launch of the vwai app for the Chinese market, which has made it easier for South Australian businesses to engage and interact with this core market. Over 850 South Australian businesses are part of the pilot phase. Mr Harrex also noted that the cruise season starts in Oct-2017, with 67 cruise ship visits scheduled with capacity of just over 159,000 passengers and crew. [more - YouTube video]

Cairns Airport exceeds 1m pax in two months for the first time

17 October, 2017

Cairns Airport reported (Oct-2017) passenger numbers exceeded one million over a two month period for the first time in Jul/Aug-2017. Domestic traffic increased 2.4% year-on-year in Aug-2017, with combined passenger numbers on Brisbane, Melbourne and Sydney services increasing 2.5% and offsetting a decline on jet operated services to other interstate cities. Passenger numbers on Queensland regional services operated with turboprop aircraft increased 3.3%. Cairns-Bali passenger numbers increased 45%, exceeding the 30% capacity growth resulting from the addition of a fourth weekly frequency by Jetstar. The service is popular with European visitors to Cairns. [more - original PR]

Visitor arrivals to Australia up 11% in Aug-2017

17 October, 2017

Tourism Australia reported (17-Oct-2017) visitor arrivals to Australia for Aug-2017. Details include:

  • Visitor arrivals: 702,800, +11.2% year-on-year;
    • China: 116,300, +23.2%;
    • New Zealand: 115,800, +3.3%;
    • US: 49,900, -0.8%;
    • UK: 37,500, -4.6%;
    • Singapore: 36,600, +19.2%. [more - original PR]
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