Qantas has used their opening statement at the regional airline inquiry to defend the higher price of travel in the regional airline marketplace.
Qantas appeared at the Darwin hearing on Friday represented by Andrew David, CEO of Qantas Domestic and Freight, John Gissing, CEO of QantasLink, Trent Mumford, Head of Government and Public Affairs, and Guy Waddell, Head of Revenue Management.
Mr David said they took their social licence and national responsibility "very seriously" and although the frustrations locals felt were genuine there were reasons why it was it more expensive to fly from Brisbane to Mount Isa than from Brisbane to Melbourne.
"The Committee would be familiar with economies of scale. Flights to regional towns are often higher because costs in remote places are higher, and these costs must in turn be spread across a smaller number of passengers," Mr David said.
"The cost of regional operations, on a per seat basis, is about 50 per cent higher than capital city operations, and 125 per cent higher than international operations."
Mr David said their major costs were labour, fuel, maintenance though like Virgin Airlines in their Brisbane hearing he also blamed airport charges.
"Airport charges make up a significant and growing portion of the price of airfares," Mr David said.
"Airport and security charges make up 17 per cent of the average fare for QantasLink on our 74-seat turboprop on a bucket of intra-Queensland routes."
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He also said airlines around the world used dynamic pricing to sell seats on a flight, which can mean flights booked closer to the day can be extremely expensive.
"The first seats sold on a flight are typically the cheapest while the last few fares are the most expensive," he said.
"And if you travel at short notice, there’s a good chance you’ll pay more than someone who booked three months earlier."
Mr David said this pricing model was universal to the tourism sector.
"This is how the Mercure hotel that we are in today, or Budget car rental at Darwin Airport, also price their services," he said.
"When it gets closer to the day you need a room – it may well cost more. Without dynamic pricing, the customers who can afford to travel the least would pay more, and the customers who can afford to travel more would pay less."
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