Qantas says international market share crucial to local airlines’ viability

A report in The Australian says that Qantas has warned the Federal Government not to take Australia’s ability to sustain a viable, privatised, internationally competitive aviation industry for granted.

In its submission to the Government’s aviation white paper, the airline says the Australian industry risks being marginalised if the nation’s carriers are unable to capture a healthy share of international market growth. It says the industry will then find it increasingly difficult to invest, create jobs, operate marginal routes, serve regional destinations and support tourism.

The warning comes in an 189-page submission that calls for another look at capacity constraints such as curfews at Australian airports.

It says attempts to lure international operators to smaller airports have had little success, and calls for urgent action to reduce queues at quarantine screening points.

Other recommendations include a review of the 49 per cent cap on foreign investment in Qantas and changes to aircraft depreciation.

The airline, which estimates it generates $2.1 million of Australian output for every $1 million of revenue, broadly supports current aviation policy but says it contains “a delicate balance of competing interests”.

It says these rely heavily on market efficiency principles that do not always recognise the lack of a level playing field in international aviation or the complexity of the bilateral system. These factors mean Australia has limited leverage by virtue of its small market and relatively remote end-of-line location, and hub carriers enjoy significant advantages over Australian airlines.

Competition is also distorted by a range of structural issues including government ownership and support and favourable taxation frameworks.

While it was possible that it would be beneficial to allow foreign carriers to pick up passengers in Australia and then to a third country, Qantas said this should be considered on a case-by-case basis and only encouraged where Australian airlines could also benefit.

It also warned that allowing foreign-owned international carriers to fly domestic routes — known as cabotage — would have “a severe impact on the ability of local airlines to retain the breadth of their current networks, in particular marginal or loss-making regional routes”.

The Qantas submission came as Singapore Airlines and the Victorian Government renewed calls for foreign carriers to be allowed to fly non-stop between Australia and the US.

US aircraft maker Boeing also backed the call for greater liberalisation of international services.

“Australia has made great progress on liberalising rights with key aviation markets such as New Zealand, Britain, the US and Singapore,” Boeing says.

“Moving to the next level — granting and receiving beyond rights for flights from Australia to Asia, the Middle East and the US — is a logical next step for the Government, given Australia’s geographic position and the increased technological capabilities of aircraft to fly greater distances more economically.”

The white paper is also seeing battles emerge among competing airport interests around Sydney.

Sydney Airport is arguing against the need for a second airport in the city while Bankstown Airport, in Sydney’s southwest, says it should be allowed to develop more passenger services.

A Report by The Mole from The Australian