By Stephen Mayne, competition zealot


We’ve all heard the
claims that Australia is just too small to sustain a third airline and
the five failures over the past 15 years – Compass, Southern Cross,
Impulse, Ansett and now OzJet – are there for all to see.

While
Impulse did manage to get out of jail after ten months by selling itself
to Qantas for enough to allow founder Gerry McGowan to buy a big house
in Sydney, the same can’t be said for the others, including Ansett,
which surrendered second place in the cosy duopoly to Virgin Blue.

However, there was once a viable and valuable third airline but it
succumbed to one of those corporatist sweetheart deals between Bob
Hawke and his two close mates who ran Ansett, Rupert Murdoch and Peter
Abeles. Check out this story by Rupert’s current editor of The Courier-Mail, David Fagan, who was finance editor of the then HWT-owned paper back in August 1987:

Australia’s third airline, East-West Airlines,
has been bought by the owners of its major private competitor. The
airline was sold for the second time in two weeks yesterday to Mr
Rupert Murdoch’s News Corporation and Sir Peter Abeles’s TNT Ltd. The
two companies jointly own Ansett Transport Industries.

They are
believed to have paid $150 million for the airline which was sold two
weeks ago to Perth’s Perron group for $120 million. It was owned
previously by another Western Australian company, the Griffin group.

Sir
Peter Abeles, the managing director of TNT and Ansett, said yesterday
representatives of the Perron group had approached him with an offer to
sell East-West. The airline has been a constant critic of Australia’s
aviation policies in recent years. Its sale to interests associated
with Ansett has major implications for Australian aviation policy.

Indeed it did, just like the Hawke Government’s crazy decision to allow
Rupert to buy the HWT in 1988 and gain control of 70% of our newspapers.

While Coles Myer has finally offloaded its department store chain, it
won’t diminish the damage being caused by our hugely powerful
supermarket duopoly. I can’t recommend strongly enough that readers
check out this feisty piece in The Guardian yesterday looking at a similar situation in the UK.

Although the ACCC has recently taken action against Woolworths over
bakery threats and Coles Myer for its conduct in the liquor market, no
structural reforms are being contemplated to tame the two giants which operate a grocery duopoly unprecedented in its power.

The Howard Government has sat back and done stuff-all as Coles Myer and
Woolworths doubled sales from $32 billion to $64 billion over the past decade and I suspect the ACCC will regret allowing
them to snap up the majority of Franklins stores when it
bowed out of Australia three years ago.

Toll’s bid for Patrick is controversial but will it make our
forthcoming “ten worst takeover approval decisions” list? Send your
submissions to [email protected]

Peter Fray

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