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ATIA finds airlines are cancelling flights to maximise profits

The industry association is urging the Federal Government to reform the sector to ensure its long-term growth. Matt Lennon investigates.

THE Australian Travel Industry Association (ATIA) is calling for urgent action and reforms to Australia’s aviation sector after a landmark study of major airlines’ operational data concluded flights were being strategically cancelled to maximise profits.

The study conducted by former Qantas economist Dr Tony Webber focused on slot misuse at Australia’s major airports and found the ‘80-20 rule’ was grossly unfit for purpose.

ATIA Chief Executive Dean Long suggested a more appropriate way to encourage airlines to operate to their published schedules would be to impose a 95-5 rule.

“This research highlights critical issues within our industry,” Long said. “It’s not just about the airports; it’s about understanding where the chokepoints are and addressing them.”

The report poses a scenario that a 5% drop in travellers due to flight cancellations could lead to an estimated $405 million loss in domestic tourism revenues from Australia’s top ten airports.

In fact, cancellations at Sydney Airport alone could cost Australia’s domestic tourism balance sheet between $143m and $572m each year, with top ten airports collectively losing annual losses of $4.8m in aeronautical revenue.

For travel advisors, the report found the primary cost incurred was time spent reorganising trips including rebooking hotels and other services, resulting in lost revenue opportunities.

The economic modelling didn’t take into account further out-of-pocket costs borne by travellers along with lost opportunities experienced by business travellers.

ATIA said airline seats cancelled and withdrawn from the market also pushes prices up for those yet to book a flight. Long called for immediate action and reforms to the aviation sector.

“The 80-20 rule is not fit for purpose,” Long said. “A 95-5 rule would be more appropriate to encourage airlines to operate to schedule.”

“This research highlights critical issues within our industry. It’s not just about the airports; it’s about understanding where the chokepoints are and addressing them.”

TravelBulletin has reached out to impacted players across the travel industry for comment.

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