Airlines tell Senate they 'maximise' regional route revenue
AN AIRLINE that claimed to have "regional Australia in its DNA” has admitted it prices flights to "maximise” profits and ups prices around events like grand finals.
But Alliance Airlines managing director Scott McMillan blamed high per-passenger fees that regional airports charged as a cause for the high prices passengers were charged throughout the year.
In Brisbane yesterday, Mr McMillan told a Federal Senate inquiry, the company's "nirvana” was flights for the NRL grand final between the Brisbane Broncos and North Queensland Cowboys, and an AFL grand final between West Coast Eagles and Fremantle Dockers.
The Senate committee is examining ticketing prices for flights in regional Australia.
Centre Alliance Senator Rex Patrick asked Mr McMillan if the company approached "ticket pricing to maximise how much you earn”.
Mr McMillan said that was a "fair” summary of their pricing strategy.
Similarly, Virgin Australia revenue general manager Russell Shaw told Senator Patrick the company tried to "maximise the revenue” on every flight.
Virgin Australia group executive Rob Sharp said examples of ticket prices skyrocketing after floods had not been done deliberately but due to an automated system that noticed increase demand.
But LNP Senator Barry O'Sullivan pointed to an example when a Virgin Australia flight was $3000 more than Air New Zealand charged for the same flight under a code-sharing agreement.
Mr Shaw said that case was an example of an error in the system.
Under cross examination by Senator O'Sullivan, Mr McMillan said a mining company who chartered the entire flight would pay "significantly” less per seat than a regional customer buying a ticket on the flight, even if it was the same plane and crew flying the same route.
Mr McMillan said Alliance offered discounted resident fares for people living in Gladstone.
Mr Shaw told the committee Virgin Australia had trialled resident fares but there had been low take-up and they had been discontinued. He said tickets could be given out on compassionate grounds at staff discretion.
Alliance Airlines operates commercial flights from Brisbane to Bundaberg, Gladstone and Port Macquarie as well as chartered FIFO flights for mining companies. Virgin Australia and Qantas also contract Alliance to fly certain routes under their banner.
But Mr McMillan blamed local airports for high costs, stating that airlines were being charged high fees per passenger to land in regional areas.
He pointed to Cloncurry Shire Council which charged $54 for every ticket to land at the airport. But he admitted other airports, like Bundaberg, charged about $10 per ticket.
Senator O'Sullivan said in submissions to the committee various airports had stated they were operating "hand to mouth” and needed to charge high fees to continue operating. -NewsRegional