Transport Airlines

Australian Legislators Try to Take the ‘Handcuffs’ Off Troubled Qantas Air

Mar 06, 2014 4:00 am

Skift Take

Nothing demonstrates that old notions of what a ‘national carrier’ is no longer apply than the case of Australia’s Qantas.

— Jason Clampet

Free Report: The Changing Business of Extended-Stay Hotels

Kym Farnik  / Flickr

A Qantas plane airborne. Kym Farnik / Flickr


The lower house has passed a bill to remove Qantas’s foreign ownership restrictions, as the opposition warned of a break-up of the national carrier and ministers argued against governing “by nostalgia and sentiment”.

But the Abbott government’s proposed legislation still faces likely defeat in the Senate.

The deputy prime minister and transport minister, Warren Truss, presented his bill to “remove the regulatory handcuffs” to the house of representatives on Thursday morning.

The bill removes part three of the Qantas Sale Act – the part that imposes a 49% cap on the total foreign ownership of Qantas. The part to be abolished also caps ownership by a single foreign investor at 25% and ownership by foreign airlines at 35%. It also requires that facilities, including maintenance and catering, used by Qantas in the provision of international services are principally located in Australia.

But the government’s bill also amends a separate law – the Air Navigation Act – to include Qantas in the definition of an Australian international airline. This means Qantas’s international operations would remain subject to restrictions to access air traffic rights under Australia’s international air service agreements. The explanatory notes say this includes a requirement that “they are substantially owned and effectively controlled by Australian nationals”.

The opposition has predicted that the government’s bill could lead to the break-up of the national carrier into international and domestic arms, the latter of which could be majority foreign owned. The government is pursuing the bill despite the low chance of securing passage through either the current Senate or the new Senate, which sits from July. The bill is opposed by Labor, the Greens, key crossbench senators Nick Xenophon and John Madigan and the soon-to-be-influential Palmer United party.

Truss said the bill would allow aviation businesses in Australia to compete on an equal footing. It would “remove the regulatory handcuffs” that applied to Qantas but not to its competitors. Truss suggested the regulations held back Qantas and were reminiscent of the last century.

The opposition leader, Bill Shorten, said proposed changes to the Qantas Sale Act were a “mirage” because it would take time for the company to attract foreign capital and it did not address the company’s immediate issues.

Shorten said the treasurer, Joe Hockey, had recently strongly signalled his support for a debt guarantee for Qantas as part of an “ugly, messy process of which the government can take no pride”.

“You know you talk a lot about loving this country,” he told government members.

“You’re very quick to talk about patriotism but when it comes to a tough issue, a subtle issue, an issue which involves steering through, which doesn’t involve you standing at a parade and taking a salute – this is important – but when it comes to the tough issues of jobs, you go missing.”

The immigration minister, Scott Morrison, said he wanted Qantas to have a strong future but the opposition seemed to want to take Australia back to the pre-privatisation situation by suggesting greater taxpayer involvement in Qantas.

“I am a passionate advocate for Qantas but I am a realist as well and I know that a government that is serious cannot govern by nostalgia and sentiment. It cannot govern by emotion,” said Morrison, a former Tourism Australia chief.

“What Qantas needs is the ability to be able to work with equity partners … and we can’t keep these potential partners locked behind closed doors as the Qantas Sale Act does.”

Labor’s transport spokesman, Anthony Albanese, said his stance against majority foreign ownership of Qantas was based on a “cold, hard analysis of Australia’s economic interest” but also that the flying kangaroo was also “a source of pride” to Australians.

“Qantas is very different in terms of its corporate structure from Virgin. Virgin have the big owners; the three government-backed airlines and of course Virgin international through Richard Branson. Qantas’s ownership structure is very different,” he said.

Albanese said the impact of a Qantas break-up on the national interest should be taken “very seriously indeed”.

The government-dominated House of Representatives divided to vote 10 times in the space of less than four hours, including multiple procedural and gag motions.

Normally debate on a bill would be adjourned after being introduced by the relevant minister, unless urgent, but Labor called for an immediate debate. Truss initially rejected the idea but the leader of government business, Christopher Pyne, soon agreed that debate should be allowed.

Pyne said the government was “delighted” to move straight to debate as the lower house could pass the bill by lunchtime, shifting the matter to the Senate where any failure to pass the legislation would be Labor’s fault. After about two-and-a-half hours, Pyne began the process of shutting down debate and moving to a vote.

In the final division, MPs voted 83-53 to support the bill.

On Thursday the Senate launched a committee inquiry into options for government assistance to Qantas, including a debt guarantee or an equity stake, and the potential impact on jobs of the Coalition’s push to remove ownership restrictions. It is likely to call the Qantas chief executive, Alan Joyce, to give evidence.

Joyce last week announced plans to axe 5,000 full-time jobs and introduce wage freezes after posting an underlying before-tax loss of $252m for the last six months of 2013.

This article originally appeared on guardian.co.uk

Tags: , ,

Next Up

More on Skift

Starwood’s Room Growth Below Expectations, and Lifestyle Brands Don’t Help
Skift Forum Video: Vimeo’s President on Creating Great Travel Videos
How Online Travel Agency Lobbyists Helped Kill Florida Hotel Tax Lawsuit
Free Webinar: How To Effectively Personalize Marketing Across Travel Sectors