Finance Finance News Govt flags aviation reform

Govt flags aviation reform

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The regulation of Qantas is back on the agenda after Treasurer Joe Hockey canvassed the idea of ditching ownership restrictions and even providing the national carrier with Government aid.

Mr Hockey has criticised the Qantas Sale Act, which says the airline must be at least 51 per cent Australian owned.

He told Fairfax Radio this morning that public debate about easing the restrictions is warranted.

“And if Australians understandably say ‘no, we think it should remain not only Australian owned but Australian controlled, and we need to have a national carrier, and I think there are many good reasons for that as well’, then we’ve got to accept we may have to pay a price for that,” he said.

At a business function yesterday, Mr Hockey described the sale act as inflexible and raised the possibility that Qantas might need public funds.

Qantas has been lobbying furiously for Government help in the face of increasing foreign support for its rival, Virgin Australia.

Chatham House rules were in place at the business function where Mr Hockey spoke, so neither he nor the meeting should have been identified.

But someone wanted his views known, and soon the Australian Financial Review had obtained a transcript of his comments.

“So, in relation to Qantas, do you say, which you know will probably be my preference, do you say, ‘OK, we are going to remove all the shareholding restrictions and let it fly’, in which case we agree that we are not going to have a national carrier,” the AFR quoted Mr Hockey as saying.

“Or do we say that we are going to have a national carrier, but we have got to do something about it.

“And if it gets into any sort of challenging environment, [we] have got to be prepared to put our hands in our pockets and support it.”

At a separate event, The Australian newspaper raised Mr Hockey’s comments with Qantas chief executive Alan Joyce.

“What we have seen in Canberra is the politicians listening to our arguments, the politicians saying there is an unlevel playing field here,” Mr Joyce said.

It is understood Mr Hockey has called for a debate on whether Australia still wants a national carrier.

Qantas sell-of bad for jobs

Independent Senator Nick Xenophon is a longstanding opponent of easing restrictions on Qantas’s ownership and was happy to weigh in.

“My fear is that Qantas will either be vulnerable to a private equity takeover or foreign takeover,” he told Radio National this morning.

“Both scenarios are bad for Australian jobs, for Qantas’s international and national reputation and my fear is that the Qantas we know today will just become a shadow of itself.”

Qantas is furious Virgin Australia is receiving a $350 million injection from its foreign owners Etihad, Air New Zealand and Singapore Airlines.

It wants the Government to review whether its majority foreign owned rival should be able to access traffic rights reserved for Australian airlines.

Alan Joyce wants immediate action

Mr Joyce does not just want the focus on the Qantas Sale Act.

“The issues about the Qantas Sale Act is it’s going to need an act of Parliament to repeal it and I think in the current Parliament getting it through the Lower House and the Upper House is an issue for us,” he said.

“We need urgent, immediate action on this.

“This can’t take months or years to go through an appeal process in Parliament.”

The Australian and International Pilots Association supports easing restrictions on Qantas’s ownership.

Association president Nathan Safe is expecting the Government to review the airline’s situation.

“What we want to see is Qantas able to compete, able to access capital on the same terms as Virgin so that it has a long-term chance of being viable as a business and as an employer,” he said.

“Whether it’s done by someone like the Productivity Commission, or by the Senate, or by the Department of Transport, that remains to be seen, but when this review does take place we think it’s vital that everyone has their chance to have their say.”

Potential buyers scarce

Even if the the laws are changed, a former Qantas economist believes few buyers would be interested in taking a stake in the airline.

Tony Webber, who is now at the Sydney University Business School, says a recent wave of consolidation in the industry means there are very few carriers looking to expand.

“Singapore [Airlines], Air New Zealand and Etihad own a slice of Virgin Australia, and they have very strong operational links with them and code share relationships,” he said.

“So I think it would be difficult for them based, on that to own, a share in Qantas.

“The only feasible carrier would be Emirates. The difficulty there is that Emirates is not in the business of owning parts of airlines.”

Qantas shares have climbed ahead at the start of trade.

At 10:25am (AEDT), they were trading 4.2 per cent higher at $1.23.

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