Tuesday, February 20, 2007/
The Government’s passion for competition has never extended to aviation. Perhaps that could change with the Qantas sale.
A chance to clear the air
For small business, the debate about whether the private equity consortium should be allowed to take over Qantas must seem a little academic.
After all, in all the years they have been using the Flying Kangaroo, they have watched successive governments – Labor and the Coalition – happily restrict the competition on some of its overseas routes. For government, its mantra seems to be “two’s company, three’s a crowd” when it comes to airline competition.
Now this might have made a little sense when Qantas was 100% government-owned. But from the moment the Labor Government decided to quit the airline business and float the airline it should have opened the skies to full competition. But no government has had the gumption to bite that bullet.
The fact is Qantas has been very adept at twisting Canberra’s arm: a threat to move jobs offshore, a hint of possible (unprofitable) route closures, especially to the hinterland, and politicians of all persuasions queue up to defend it.
But that’s no help for the small business trying, for example, to crack the US market. It’s hard enough to push export sales off a small balance sheet without having to pay Qantas extra dollars because it doesn’t face full competition.
So for these businesses, it matters little whether Qantas remains under its current ownership structure, is bought out by private equity, or is even acquired by another airline. What they want to see is more competition in and out of Australia so that airfares drop.
In recent weeks, as the Qantas sale has generated more political heat (especially among nervous Coalition backbenchers). It seems the Government is starting to get a little worried about it. Undoubtedly most punters would have little idea of the merits or otherwise of the $11 billion private equity deal (a recent poll showed many still thought it was government-owned), but Qantas is an Aussie icon – just like the Snowy Mountains scheme – and we know how quickly the Federal Government retreated there.
The private equity partners keep saying nothing substantive will change at Qantas. Perhaps they mean it. But the Federal Government could really test their resolve by saying the new owners would have to compete on a level playing field. At the very least it would ensure cheaper airfares for small business.