“The preferred position is to agree to continue to shield Qantas from competition on its lucrative trans-Pacific route… In exchange, Qantas will be expected to keep its maintenance facilities in Australia to preserve Australia’s skills base in the aviation sector.”

Today’s Oz editorial highlights the tradeoff that the Howard Government is hoping will keep Qantas in line. Acting PM, Mark Vaile, has said several times over the past few days that he is confident that the national interest will be provided for by the free market.

However, Henry recalls a similar situation last year – during the cross-media reforms – where the Howard Government asked the electorate to express confidence in the free market. Of course, as the ink was drying on the new media legislation, and despite the assurances of Senator Helen Coonan, several massive deals went through that radically altered the make-up of the media industry. Can we be sure that the new Qantas deal will not radically alter this iconic Australian company?

A Morgan Poll released today found that the Australian public are far from supportive of the Qantas takeover. Despite respondents being told that Qantas will remain majority owned and controlled by Australians, 51% said that the takeover should not be allowed, compared to only 41% being in favour.

However, Special Roy Morgan Qualitative Research found that much of that opposition was based on incorrect assumptions. For example, some respondents claimed that they opposed the takeover because they wanted Qantas to remain Government owned – which of course is not presently true. Also, many respondents were unaware that at present there exists a significant amount of foreign ownership of Qantas.

There is another angle. The new, highly-leveraged Qantas will win because it holds a Government-generated monopoly over the trans-Pacific route, and the Government will likely win by keeping jobs in Australia. Who will lose? The consumer.

According to Roy Morgan Research Travel and Tourism Study, Australia tops the list as a country people (in both the UK and the US) would like to visit but don’t because it is too expensive. The main reason is the exorbitant cost for the trans-Pacific flight, which has severely limited Australia’s potential appeal to international tourists. Why would North Americans pay $2500 for a return ticket to Australia when a ticket to Europe is as low as $500? Singapore Airlines spokesman Stephen Forshaw said recently that “Protection of Qantas amounts to an indirect subsidy of a private commercial company.”

If the Government wishes to show faith in the free market, then it should immediately open our airways to competition.

Read more at Henry Thornton.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey