The Echidna: Whiff of gouging overpowers the smell of jet fuel

As far as most performance indicators go, Qantas has had a pretty rough flight since the barriers to international travel came down.

First it was clogged terminals - blamed idiotically by CEO Alan Joyce on passengers not being match fit after two years of COVID lockdowns and not on the lack of airline staff.

Then, as travel-starved Aussies took to the skies in the northern summer, it was lost baggage and cancelled flights. And, as summer loomed and the first Christmas in which far-flung families could reunite came within sight, it was eye-watering fare prices. What used to be enough to get you to Asia and back was being demanded to get you from Sydney to Melbourne.

And, of course, over summer it was mid-air turnbacks or forced landings, even a mayday as a flight from New Zealand limped home on one engine.

So it seems remarkable that in the same December quarter that saw inflation nudge higher than expected - making another interest rate hike next Tuesday inevitable - Qantas profits soared.

Market analysts had forecast the airline's profit for the first half of the financial year would land somewhere between $350 and $600 million. By mid-October Alan Joyce revised that to between $1.35 and $1.45 billion. That profit surge was driven by demand and the airline's desire to extract every last dollar punters were prepared to pay to get from one part of Australia to another.

Fair enough, the free-market ideologues will bellow. The world runs on supply and demand. That's until you see how the cost of travel has boosted inflation - the cost of which will be passed to borrowers through an increased cash rate.

In the December quarter, domestic travel and accommodation led the inflation numbers with an increase of 13.3 per cent, followed by electricity (up 8.6 per cent) and international travel and accommodation (up 7.6 per cent).

The leap in profits is so spectacular, the whiff of gouging is overpowering the smell of jet fuel. No wonder the airline's share price has rocketed since last July, when all the bags were being lost and the flights cancelled.

Is it too cynical to suggest borrowers - struggling after the most aggressive rise in the cash rate for decades - will ultimately pay part of the price for the profit surge at Qantas, the dividend that will inevitably be pocketed by shareholders and the bonus that will go to Alan Joyce?

Of course, if inflation isn't contained soon, and interest rates continue their steep climb, the goose which laid the golden profit egg for Qantas will be strangled. No one except for the very well off will be able to afford to fly. And the budget alternatives like Bonza will look way more attractive.

HAVE YOUR SAY: Have you put off flying because of the ridiculous cost of airfares? Decided to drive or take the train? Has Qantas fallen in your estimation over the past few years? Should corporate profits be allowed to contribute to inflation? Email us: echidna@theechidna.com.au

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Diane says: "The first thing we need to do is address racism against our own Indigenous people. How have we not changed our views after all this time? The threat to democracy is truly frightening and very real. I believe that young people really do not understand what it means to be completely ostracised. Perhaps they are not being educated about what really happens. Change needs to come from the top and in the home."

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