Qantas’ Troubles Mount With Looming Shakeup of Airport Slots

(Bloomberg) -- Qantas Airways Ltd.'s woes deepened after the government said it's looking to shake up the way takeoff and landing slots are granted in Sydney in order to help smaller rivals like Rex and Bonza.

Airline access to Australia's biggest aviation hub “has not kept pace with global developments,” a review of the aviation sector said Thursday. The government wants to modernize slot allocation at the airport and tighten regulation “to ensure that slots are not being misused by airlines,” it said.

The proposed policy shift adds to the current crisis at Qantas, days after Alan Joyce quit as chief executive officer amid accusations the airline sold phony seats on thousands of canceled flights. Australia's antitrust watchdog has said letting other airlines operate more flights in and out of Sydney would be one of the most effective ways of reducing Qantas's dominance of the domestic market.

“We will have more announcements to make about these reforms in due course,” the government said in its review. “There are indications our regulation is not delivering the best outcomes for consumers.”

Qantas shares were down 2.5% at 11:32 a.m. in Sydney. The stock has lost about 8% since Australia's competition regulator last week started Federal Court proceedings against Qantas over the alleged money-for-fake-seats scandal.

For more details of Thursday's review, click here

New entrant Bonza and regional operator Rex, which is building a route network between Australia's biggest cities, are struggling to operate services at Sydney's airport during peak times. There's concern that major airlines are manipulating the existing rules to hoard more slots than they need, the government said.

Airlines can keep landing and takeoff slots indefinitely as long they use them 80% of the time. This has led to accusations that operators schedule flights, and then cancel them, simply so that they can retain the slots and stop them being farmed out to rivals. Qantas denies such behavior.

The clamor from customers, regulators and lawmakers to rein in Qantas is intensifying. In addition to the allegations of fake-seat sales, the airline is also accused of over-charging passengers, hoarding customer flight credits and lobbying government departments to limit foreign airlines access to Australian airspace. Qantas controls more than 60% of the local market.

“The Australian government is actively seeking outcomes that deliver a more competitive aviation sector,” it said. 

An additional aviation report — a so-called White Paper — is due next year and will cement government policy for the sector for the coming decades. 

(Adds today's stock decline in the fifth paragraph)

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