Qantas as we all know took one hell of a hit this year, with 5,000 jobs on the line and 50 aircraft to be deferred, delayed or withdrawn from their fleet.
One of the things Qantas says that is holding it back is the “Qantas Sales Act 1992“, that dictates how much foreign investment Qantas can hold (as well as the initial privatisation of Qantas).
Specifically, this relates to Part 3 of the act – which is is limited at 49% for foreign investors with foreign airlines allowed to own just 35%.
Qantas claim this is hurting their possible growth as outside investors could bring money to their airline and boost its presence. Virgin Australia (its main domestic competitor) has no such rules, and has attracted investment from Etihad, Air New Zealand and Singapore Airlines (who own a total of 63% of the airline), as well as Virgin Group (who own 10%) and local investors
Since its recent losses, Qantas has been asking for debt guarantees and more freedom to operate. Australian Prime Minister states
“I have enormous faith in the ability of Qantas to compete and to flourish, but I think it is best placed to compete and to flourish if it is unshackled – and un-propped up by government, I hasten to add,”
So you’d think it be simple – repeal the law and get people to invest in Qantas. No so much, as both the Australian Green and Labour parties are concerned about possible job transfers outside Australia. So much so, these parties are against removing the restrictions on ownership.
Both the Labour and Green parties have said they are against removing the foreign ownership restrictions.
Qantas have put out a press release about the plans, noting:
Qantas notes the Government’s announcement that it intends to attempt the repeal of Section Three of the Qantas Sale Act.
We have consistently said that removal of foreign ownership provisions that apply uniquely to Qantas is an important longer term objective to create a fair and free aviation market in Australia. However, it is clear that such a move would have limited chance of passing through the Senate.
We need immediate action to address the imbalance that has been allowed to persist for almost two years – namely Virgin’s unlimited ability to access foreign capital from government-owned airlines to fund a loss-making strategy against Qantas.
If this proposal by the government to change the Qantas Sale Act is not passed, we would expect the Government and the Parliament to consider alternative measures to balance the unlevel playing field in Australian aviation.
Ouch. The options given by Qantas are clear: Give us the freedom to operate or support us in our fight.
For Qantas CEO Alan Joyce – this is a pivotal moment for him. Whilst under his leadership, he managed to set up a very successful Low Cost Carrier (JetStar), he took his eye off the ball with Qantas and Qantas International – letting its competitors flood in and eat up the passenger loads (one of his competitors he’s buddied up with – Emirates in an attempt to stem further passenger losses).
If Qantas gets neither the ownership rules lifted or government backing, both he and the once proud airline are on very rocky footings indeed….
