Although Qantas has detractors, most Australians feel a little protective of their national flag-carrier, writes guest columnist Mark Mulligan.
From its humble beginnings as an outback mail service almost a century ago to the global player of today, Qantas’s evolution reflects Australia’s own transition from a largely rural exporter to free-trading, diversified market economy.
But competing in the global aviation market is not as straightforward as, say, shipping commodities or finding niche areas in value-added food products or medical devices, which Australia does well.
Fierce competition from low-cost airlines and state-funded carriers, currency factors, high fuel costs, regulatory imbalances between different markets and even high-speed train services have forced numerous so-called “legacy” airlines from around the world either out of the sky or into often-unwieldy alliances.
In the case of Qantas, Australia’s geographical isolation, sheer size and sparse population make it even harder to stay profitable in a global marketplace. Australia has no world hubs where transit passengers can be funnelled onto national carriers or their partners for onward journeys. Sydney will never be a Singapore, London, Dubai or Frankfurt in this regard.
Also, unprofitable domestic routes are effectively subsidised by a (gradually shrinking) suite of money-making services.
In response to all this, Qantas has for years been slashing jobs and cutting costs where it can. The latest restructuring, announced this week by the chief executive officer, Alan Joyce, is particularly harsh, involving 5000 jobs cut. Workers are angry, blaming poor management. The Federal Government says both sides could do better, while the Opposition has weighed in with a wide-ranging attack on the Prime Minister and his team. Strip away all this passion and theatre, however, and the real options open to Qantas are limited.
By amending the special legislation which currently governs the Flying Kangaroo, Canberra can help Qantas widen its financing options and consider equity alliances with foreign investors, including other airlines. The economic rationalists will tell you that when regulatory distortions such as the current limits on foreign ownership are removed, capital naturally flows to where the return is best. The Government is probably also under pressure to consider other aspects of the Qantas Sale Act which the airline considers are holding it back.
In the minds of many, more foreign influence in the running of Qantas would make it less Australian. However, in a world where commercial borders are blurred, we can no longer be precious about who owns Qantas. – Mark Mulligan lectures in government and institutions at Macleay
Top photo from Qantas archives shows the company’s first plane, an Avro 504K, drawing a crowd in 1921.