Airlines should not be monopolised: Official

THE domestic airline industry should not be monopolised even though there are only two major airlines in the country, according to the Independent Consumer and Competition Commission (ICCC).
ICCC executive manager competitive markets and fair trade division Steven Sugl said competition was important to ensure consumers benefited.
He said this during a press conference announcing ICCC’s decision not to authorise Link PNG’s proposal to acquire 40 per cent of nasfund shares in PNG Air Ltd.
Sugl said the ICCC did not have data to compare competition in the local airline industry with others in the region but it was important to maintain that competitiveness among service providers.
He said protecting the current operators was crucial given that it was unlikely another operator would enter the domestic market.
“We just have to make sure that the two players at the moment are protected,” Sugl said.
He said the ICCC could regulate air fares but that would be a last resort and the commission would rather allow the market to dictate cost of services.
“We do not regulate the airfares at the moment so we do don’t have information as to what goes into the fares, but the main costs are fuel and leasing costs of aircraft and other costs that add to the final price,” Sugl said.
In terms of public benefit and detriment assessment, the ICCC was of the view that if the proposed acquisition was authorised, it would create a monopoly that would disincentivise innovation and efficiency, which was often true in monopoly markets where actual and potential competitive pressure is lacking. If there was competition, the market could correct itself resulting in a viable domestic aviation industry.