For the better part of the last 18 months Australia’s aviation sector has come under intense scrutiny about whether a flight is fair dinkum value. A lot of that flack has been directed at the national carrier Qantas, particularly around whether its service has been up to scratch, whether it has purposefully price gouged customers when seat capacity was low and questions about how it lobbies Government to influence decisions to quash competition. But according to the world’s peak airline body — the International Air Transport Association — part of the problem is the Federal Government’s unwillingness to budge on its approach to allowing more flights into the country. In light of the controversial decision earlier in the year to block 28 additional flights a week by Qatar Airways at Brisbane, Melbourne, Sydney and Perth, IATA believes the Federal Government needs a new approach at attracting more flights into Australia if it wants to see international seat capacity recover to pre-pandemic levels. Australia’s international seat capacity is sitting at around 80 per cent of 2019 levels and according to IATA’s latest data, the Asia Pacific region is lagging compared to other major travel hubs like Europe and North America. For Australian travellers that has translated to a lack flights through to Europe via the Middle East, which has translated to airfares on major routes staying higher relative to pre-covid levels. An issue which became a central theme in the public sphere was the Government’s decision to block more flights from Qatar, which partner airline Virgin Australia’s boss Jayne Hrdlicka said would have an immediate effect in bringing down the price of an airfare. IATA chief economist Marie Owens Thomson said the way the Government deals with flights through singular bilateral agreements with other country’s was part of the problem and argued a more liberal approach that fits the demand profile for seats was needed. “I think that the Government’s role is to enable and protect and should look at what is they’re not doing that is therefore not enabling something (more flights) to happen spontaneously,” Dr Owens Thomson told The West Australian in Geneva. “It is not optimal that governments are getting involved in network planning and route planning. I don’t see at all that that should be the government’s function.” A number of groups such as Flight Centre and Virgin flagged the flights from Qatar should have been granted given a number of carriers like Emirates and Etihad had not fully returned to Australia and were only using half of the slot allocations the United Arab Emirates airlines were entitled. Accusations were also flung at Qantas for strong arming the Government not to accept the flights as it would lower Qantas and its partner airline Emirates’ market share on flights through to Europe. Ms Owens said the Federal Government as the regulator should be looking across the board where seat capacity is needed and attracting airlines which could assist recovery of inbound and outbound flights from Australia. According to IATA, the Asia Pacific region, which includes Australia, is not expected to reach pre-pandemic capacity levels in 2024. Simultaneously in Australian aviation, there have been calls, particularly at the nation’s biggest hub Sydney Airport, for a review of the current slot system over accusations it is allowing Qantas and Virgin to hoard slots and keep competition out. At the IATA conference on Wednesday, director general Willie Walsh urged governments shouldn’t deviate from international status quo, arguing the existing global slot system was a proven method to fairly divide the pie of limited space for planes. IATA’s head of world airport slots John Middleton added the Australian Government had been sitting on recommendations for four years through the Harris review, which outlined slot management needed to become more in tune with global standards. Mr Middleton said not acting on those recommendations or a dumping of the slot system entirely would only further halt the return of normal capacity levels and have a greater cost to the local carriers Virgin and Qantas. “If you were to create a whole different set of rules in Australia or anywhere else, it would cause chaos for the planning process, which is difficult enough as it is,” he said. “It then puts the homebase carriers at a definite disadvantage because obviously, they’re far more exposed to that regime than someone who would only be operating, a couple flights a day.” But on top of the issues stemming from a sector still recovering from the pandemic, another big question mark about how travel will be impacted by the rising cost of living pressures caused by interest rates and inflation. Ms Owens from IATA said the fares across the board have been “sticky” and flagged the full effects of rate rises are yet to influence people’s need to travel. She added the traditional price sensitivity relationship about travel in an economic downturn has “vanished” since the pandemic. “Maybe there’s a consumption pattern evolution here where people are really starting to say, I have to travel and this is a must in my consumption bundle and therefore households are allocating more money to this,” Ms Owens said. “What’s for sure true is that we have not seen any real evidence of the kind of sensitivity to price evolutions that we are used to historically. It’s like price sensitivity has vanished.” “I think that price sensitivity will come back the moment unemployment rates start to increase.” Qantas has announced new services in the middle of 2024 through to Paris from Perth and is expected to be back to pre-pandemic capacity by March next year. But in 2024, Government will need to face questions about how its incoming aviation white paper will ease the number of pain points and attract more carriers to the places Australians want to fly.