Australia’s airlines have been quietly quietly seeking ways to cut costs for years and they have been told to look to the skies for solutions.
The country’s top transport regulator is expected to release its latest report on the industry’s financial position and its plans for 2017.
In an effort to save money, the Australian Competition and Consumer Commission has been asked to set up a taskforce to study the sector.
Its first task is to find ways to lower ticket prices by 20 per cent and to consider a pilot program of a “one-off price reduction”.
It is also to examine the “costs associated with flying”, as well as the cost of flight training and other costs.
The ABC understands that the agency is also studying whether the industry could introduce “flexible pricing” whereby passengers can pay more for a flight if it offers a cheaper ticket.
A study by the regulator’s air travel body, the Bureau of Consumer Prices, last year found that Australia had one of the highest cost per passenger ratios in the world.
It found that between January 2017 and April 2018, Australians spent an average of $1,619 per person on air travel, a 14 per cent increase from the previous year.
However, a 20 per percent price cut by airlines would mean the country would save $2.6 billion, or 4 per cent of its $7.3 billion annual operating budget, the bureau found.
This would result in the reduction in revenue by more than $500 million.
The government has committed to increasing the number of people flying in the coming years, but its plans have yet to be fully put in place.
The bureau’s report also warned that Australia’s “unstable” air transport system is putting people’s lives at risk, and warned that “a significant decline in aviation infrastructure” could put people’s health and safety at risk.
One of the most pressing problems, the commission’s report said, is that the “dynamic of the airline industry has changed significantly over the past few years”.
The report found that the number and frequency of flight cancellations and delays has increased and that this “has affected the travel experience for passengers and their families”.
“As a result, people’s experience of air travel has deteriorated,” it said.
“The increased frequency and frequency in the air travel system has resulted in people having to make travel arrangements with a new airline and travel with that airline at different times.”
The bureau warned that the industry was experiencing “an increased number of cancellations due to weather and congestion”.
However, it warned that this could only be resolved by “proving a strong air transport infrastructure in an effective way”.
“In order to address the challenges in air transport, there needs to be a coordinated response from all levels of government, industry and industry bodies, as well a significant increase in the cost-savings of air transport,” the report said.
The report said the government should also consider introducing a “flexibility” option for air travel where airlines could offer a cheaper or no-fare ticket on some routes.
The industry is currently exploring how this might work.
However a spokesman for the Australian Transport Safety Bureau, which administers the Bureau’s air transport safety standards, said it was up to the government to decide whether to introduce a “flexible pricing option”.
“We’ll look at the evidence and come to a decision as to whether we should introduce flexibility pricing or not,” the spokesman said.
A spokeswoman for the Federal Government said it would look at whether to “review and implement any pilot programs that might be available to the industry”.
She said that the bureau’s latest report “shows there is a need for more information on the air transport industry and how it can be reformed.”
The report comes after the Australian Taxation Office (ATO) warned that its budget was being “lulled” by the government’s failure to keep up with sky-high demand for flights.
The ATO said that despite the government committing to a 10 per cent cut to the cost per person of travel by 2025, demand was still soaring and was still growing.