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Richard Branson Calls Australian Rival Qantas a ‘Financial Mess’

Dec 04, 2013 5:00 am

Skift Take

While the instinct to help Qantas may be strong, Australia’s leaders need to make sure it knows the difference between a carrier that needs a bit of temporary help and an Alitalia.

— Jason Clampet

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motox810  / Flickr

Two Virgin Australia 777s at the gate. motox810 / Flickr

Sir Richard Branson has attacked bosses at rival airline Qantas, claiming that if it was “better managed” then it would not be in a “financial mess”.

The British billionaire’s outburst on his Virgin website follows Qantas’ backing of a plan suggested by Australian Treasurer Joe Hockey that foreign ownership rules concerning the country’s flag carrier should be relaxed.

Current laws restrict foreign stakes in Qantas to 49pc, with overseas airlines allowed to own just 35pc. Qantas claims this puts it at a disadvantage to rivals such as Virgin Australia, which is not subject to the regulations.

However, Sir Richard has now claimed that the Australian market is more than competitive already.

“We began competing with Qantas in 2000 with just two planes and one route,” he wrote. “Over the last 13 years we have grown the airline to more than 140 planes but flying in Australia has sometimes been akin to having a bleeding competition with a blood bank.

“Qantas was the giant in the market with a myriad of foreign alliances and advantages determined to bleed Virgin Blue, now Virgin Australia, dry.

“However thanks to the superior quality of Virgin Australia’s management and its staff, it has not only survived but has now managed to create a much more level playing field which is offering the customer more choice and better value.”

Australian Prime Minister Tony Abbott has indicated that he could be open to changing the foreign ownership rules for Qantas, which saw profits at its domestic operations fall 21pc in the financial year to June 30 to A$365m (£205m). The PM told Fairfax Media radio: “These limits were set by legislation quite a long time ago … I don’t think anyone says that because something was done once it is set in concrete forever.”

Alan Joyce, chief executive of Qantas, wants “urgent, immediate action” from regulators to ensure his airline grows, despite already sealing a tie-up with Emirates and dominating the Australian market.

Sir Richard said any such move from the authorities would be “grossly unfair”.

“Today Qantas’ alliances are still larger than Virgin’s but our improved position is having a big impact on Qantas, who are now complaining about the intensified competition.

“It seems strange to me that a Liberal government would even consider tilting the playing field once again in Qantas’ favour. It would be grossly unfair, undermine the great work of Virgin Australia’s management team and staff and bewilder investors in Australia and worldwide.

“If Qantas was better managed and offered the public a decent service; it would not be in the financial mess it is currently claiming it is in. Government should be there to encourage competition, not to prop up the weak when the going gets tough.”

Qantas had not commented at the time of publication.

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