Qantas On Virgin Australian Ownership

[Grahame Hutchison]

From Twitter this morning ...


Qantas confirms it has contacted Federal and State governments to express concerns as the national carrier about potentially damaging shifts in Australia’s aviation industry.


The recent announcement by Virgin Australia that it would receive more than $300 million in further capital from three government-backed airlines highlights the uneven playing field created by existing policy settings.


Qantas is a world-class airline, employs over 30,000 Australians and continues to be the carrier of choice for many, but is subject to a unique set of limitations around foreign capital with no corresponding concessions.


Virgin Australia’s proposed capital raising could see its foreign ownership rise to more than 80 per cent without the need for any further regulatory approval. Despite this, the airline would retain all the traffic rights given to Australian carriers.


If wholly privatised, Virgin Australia’s ability to receive potentially unlimited capital from its government-backed owners would seriously distort the domestic aviation market for the benefit of foreign interests.


The decision of these shareholders to invest in Virgin Australia’s loss-making strategy highlights that these airlines aren’t subject to the same commercial realities as Qantas.


We have asked Federal and State governments to fully examine the motives behind the virtual takeover of Virgin Australia by foreign airlines, and to prevent destabilising of the domestic aviation industry, local tourism and jobs.

[JamesL]

Whinge whinge whinge, it purely shows the inadequate management of the QF group and should be an encasing point to sack the board and the CEO and allow for fresh blood and potentially an AUSTRALIAN leader of the QF group.

[Greg McDonald]

Wait on QANTAS, I'll go look for my violin.....

[Mark Howarth]

Does anyone know if QF was whinging as they are like now when Ansett was fully owned by an overseas company back in Feb 2000?

[Peter H.]

What!! Qantas a world class airline. Without Emirates they would be finished as an international airline. All Joyce wants is more routes cancelled.

[Kent Broadhead]

Does anyone know if QF was whinging as they are like now when Ansett was fully owned by an overseas company back in Feb 2000?
I don't recall it, but ANZ owned Ansett (albeit via SQ control) didn't provide the same level of competition after the groundings, even with its Olympics partnership.

I think it is time for the legislation to be changed to allow a higher level of foreign ownership - let others take the capital risk!

[Dave Dale]

Does anyone know if QF was whinging as they are like now when Ansett was fully owned by an overseas company back in Feb 2000?

If I recall, British Airways held 20% of Qantas in 2000 before it sold it's holding in 2005 (?)

Dave

[Brad Myer]

If you agree you can sign the QF petition:

http://fairgo4qantas.nationbuilder.com

[Daniel M]

If you agree you can sign the QF petition:

http://fairgo4qantas.nationbuilder.com

LOL !!!!

[Hugh Jarse]

I won't be signing the petition. How many (countless) times has Qantas used predatory pricing against its competitors in order to maintain its monopoly? I saw it MANY times with its regional routes when I was at QLink.

They have used this tactic several times against Virgin when it attempted to move into a monopoly market. Alice Springs comes to mind.

Qantas' problem is Joyce, not Virgin. The first step he should take is to re-engage his workforce. Unfortunately, I think that's beyond his capability.

Never give a boy a man's job.

[JamesL]

You mean never give a leprechaun a man's job! ;)

[NathanJ]

If you agree you can sign the QF petition:

http://fairgo4qantas.nationbuilder.com

Boggles the mind to think how many ill informed mongoloids are "signing" this petition.

[NathanJ]

Qantas re Virgin Australia. "this has led to a tangible change in the carrier's behaviour. It lost $100m last year. It is no longer seeking to maximise profit. It is determined to run at a loss in the knowledge that its sovereign shareholders will bail it out, and it's looking to drag Australian aviation down with it"

:facepalm:

[JamesL]

IF people would actually look at the figures VA is actually not really a huge loss making machine, you would see that the airline made upwards of $105 million one off payments (ie TT/XR)

[Ash W]

To all the people complaining about Qantas complaining, I have a simple question. Why should there not be a level playing field? If Qantas is limited, (not excluded hence why BA was allowed to have 20%) in what overseas money can be put into it , due to a sales act that has outlived its usefullness, then why is Virgin Australia not also limited?

Would have thought the best thing for the industry as a whole is to have the same rules apply to both, which would be best acheived through removing the limits imposed by the sales act, which is what I beleive Qantas is really after.

[Mick F]

Correct me if I'm wrong, but doesn't Virgin have to be at least 50% (or 51%?) Australian owned to be able to fly internationally from Australia? I'm assuming they are at least 50% Australian owned if those rights haven't been taken away from them.

Therefore I'm struggling to see what Qantas are whinging about, apart from maybe crying like a kid that they're getting their backside whipped by Virgin. If they want to increase their foreign ownership to 49% (if they could find anyone), then go for it.

Just like if foreign airlines want to throw their own hard earned money at Virgin in the hope of getting a return on it, then go for it. They're still only owning a percentage of the value of Virgin.

Time to quit whinging about your own inadequacies Qantas and compete.

Mick

[Dave C]

Virgin Australia is split in 2. The international Arm is less than 50% foreign owned (so their international arm complies with the 50% rule that you speak of), Virgin Australia Domestic will be 80% foreign owned. That is what they are whinging about. Not only that, they will be 80% owned by foreign Governments (Etihad, Singapore and NZ are all Government owned airlines), therefore are not subject to the same rules as Qantas.

I'm no fan of Joyce, but he is 100% correct about this. It's a disgrace that 2 businesses doing exactly the same thing should be subject to different rules. Borgetti knows this is hot too, considering his response vaguely addressed something about monopolies, which of course has nothing to do with this. Now he is threatening to sue. He's getting worried his unfair advantage may be pipped at the post.
I believe Virgin Australia should be required to be 50% max Foreign owned, not that Qantas should be allowed to increase it's foreign ownership, but that's just me.

[Ash W]

You are correct kinda anyway. The corportate structure of Virgin Australia is such that the international ops are seperate and technically not foreign owned thus getting around the 49% rule for foreign investors. Ansett did pretty much the same thing with their international arm.

Virgin Australia the company however can go futher than 49% and with the planned investment will be over 70% foreign owned. Personally I have no issue with this.

But Qantas on the other hand can have a max if I recall of 49% foreign ownership with foreign airlines not being allowed to own more than 35% (collectively) and no one company owning more than 25%, this is due to the Qantas sales act, not traffic rights. So massive difference and this I do have issue with and agree with them.

So in short there is a massive difference. Does Qantas have a gripe, sure, are they going about airing it the right way, well no. The real issue isn't what Virgin is allowed but what Qantas aren't allowed to do. It should be the same rules for both.

[Bradley Porter]

I find it very amusing that Joyce wants the workforce to now unite with him on this issue.

The only reason he cares about the longevity of QANTAS is because he hasn't sucked the place dry enough to bail just yet.

If QANTAS is to move forward and become a force again in the Airline industry the first thing that needs to happen is to get rid of Joyce and the board and put someone in their place that wants to re-build an airline rather than a personal fortune at the expense of a once great australian icon !

[Ash W]

So I take it you have shares in Qantas and that you are going to make your feelings known and vote at the AGM. It is afterall a private company who's role it is is to make money for their shareholders.

[Bradley Porter]

So I take it you have shares in Qantas and that you are going to make your feelings known and vote at the AGM. It is afterall a private company who's role it is is to make money for their shareholders.

Owning shares in QANTAS would be like putting your life savings on Verema to win next years cup, a poor investment decision the likes of backing a dead horse!

[Ash W]

Couldn't agree more. However as your not a shareholder then who the CEO is and what he does is of no concern to you (or me as I don't have shares either).

[Radi K]

Good article - http://www.airlinehubbuzz.com/the-qantas-sale-act-alans-convenient-excuse/

The Qantas Sale Act should go - but it's a little rich for AJ to be calling QF "a beacon for Australians in need" - A kangaroo tail can only be seen at a handful of overseas destinations these days.

[Nigel C]

Yes, but hasn't Qantas been drafted in for emergency evacuations after natural disasters, terrorist activity etc? Perhaps that's the context Joyce was trying to convey?

[Ash W]

I don't know about Qantas being drafted, think they happily volunteer their services and of course the public, rightly or wrongly seems to have an expectation of it.

[Hugh Jarse]

Volunteering services is not the exclusive domain of QF or Alan Joyce. Virgin flew considerable numbers of emergency service volunteers around the network during the recent bushfire crisis.

[JamesL]

Also for the CHC earthquakes.

[Bradley Porter]

Couldn't agree more. However as your not a shareholder then who the CEO is and what he does is of no concern to you (or me as I don't have shares either).

In your opinion of course.

[Kent Broadhead]

Yes, but hasn't Qantas been drafted in for emergency evacuations after natural disasters, terrorist activity etc? Perhaps that's the context Joyce was trying to convey?
Change the rules and draft either!!

[Grahame Hutchison]

From Australian Aviation ...


The Australian and International Pilots Association (AIPA) has offered its support to Qantas’s campaign to change the Qantas Sale Act amended, with the caveat that any increased investment that would flow from easing of the Act’s restrictions be directed to the airline’s Australian operations.
In a statement AIPA, the Qantas pilots union, notes that rapid changes in the Australian airline industry means it is now “willing” to support changes to the Qantas Sale Act, which limit foreign ownership levels in Qantas to 49 per cent, and any single airline investor to 25 per cent.
“The problem we have at the moment is an un-level playing field: Virgin is free to access foreign investment channels that Qantas cannot due to the restrictions of the QSA. It is therefore clear that the only viable policy approach is for the QSA to be reviewed. However, if changes to the QSA are justified to ensure the Australian industry is not disadvantaged against foreign competitors, then it is absolutely vital that any advantages gained through its amendment must flow straight to Qantas’s Australian operations,” AIPA President Nathan Safe said.
“Therefore, AIPA would support changes to the QSA, but only if the foreign investment that flows from those changes is used to invest in Australian aviation and Australian jobs. Under such changes, new streams of foreign investment could not be used on the sort of unproven forays into Asia that we have seen Qantas Group pursue through Jetstar and other subsidiaries in recent years.”
Continues Safe: “While specific ownership restrictions in the QSA may have become unsuited to the modern environment, the fundamental purpose of the Act – to ensure that the vital economic and social benefits that come from public ownership of a national airline are still achieved under private ownership – is as important as ever.
“So if Qantas management is truly seeking changes to the QSA in order to support its local operations, the local economy, and local jobs, then there is no reason that such a caveat should present a problem.”

[Montague S]

Perhaps QF can dip into its coffers and buy a little of Virgin. ;)

[Thomas Collins]

AFR Story (http://www.afr.com/p/national/hockey_flags_lifting_qantas_foreign_2kKsGSvuryS2M3 S5mJXXVK)

[Grahame Hutchison]

Treasurer Joe Hockey is backing a move to review the restrictions on Qantas.

[Grahame Hutchison]

ABC coverage (http://www.abc.net.au/news/2013-11-28/hockey-flags-ditching-foreign-ownership-rules-for-qantas/5121404) ...

[Radi K]

Borghetti has written an open letter to the government and held a press conference in Brisbane. He was quite direct in his wording and seems quite frustrated.

More here. http://blogs.crikey.com.au/planetalking/2013/11/29/virgin-says-it-was-disadvantaged-by-secret-govt-qantas-deal/

Just looking at the pure numbers from the AGM reports, it looks like Virgin is in a much tougher position financially than Qantas right now.