Treasurer Peter Costello has staked out some important turf on the regulatory issues surrounding the Qantas takeover on 774 ABC Melbourne this morning and he’s particularly focused on the question of whether the national carrier remains committed to being a “full service domestic airline”.

Given that the Qantas business plan is to replace full service Qantas flights with a cheaper single class Jetstar service, this will be an important debating point.

It’s quite easy to compare on their websites the scale of the Jetstar and Qantas operations by seeing the number of destinations they fly to.

Jetstar has already stepped up flights to destinations such as Byron Bay, Mackay, Rockhampton, Townsville, Hamilton Island, the Sunshine Coast, the Gold Coast, Hobart and Launceston and the list is expanding with each passing month.

Sign up for a FREE 21-day trial and get Crikey straight to your inbox

By submitting this form you are agreeing to Crikey's Terms and Conditions.

However, what would the pollies think if Qantas suddenly decided Jetstar should start servicing some of the Canberra routes? After all, Virgin Blue has withdrawn from the Sydney-Canberra route and all those pollies do like flying business class on the public purse.

Macquarie Bank should know about these issues as it is the biggest Qantas customer after the Federal government, spending more than $70 million a year. But how many of the millionaire factory bankers have ever flown Jetstar and battled through in cattle class without free food?

Costello’s interview with Lateline Business host Ali Moore on ABC Melbourne this morning was interesting on a range of fronts. For instance, he expressed concerns about excessive corporate gearing and was adamant there would be no implied government guarantee over the $15 billion Qantas debt.

However, it would never come to this because the Qantas owners would simply slash routes and lobby for greater protection if a collapse appeared imminent and the Federal Government would dread having to step in.

We all remember the chaos when Ansett collapsed, but it would be three times as bad if Qantas fell over. However, this is extremely unlikely because the bankers would simply sell the airline operations to recover as much of their debt as possible if the $3.5 billion equity buffer had indeed evaporated.

The only threat to this scenario would be if another Richard Branson came along with a third airline that triggered a price war similar to what sent Ansett under in 2001.