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Issue #1622      December 11, 2013

Editorial

Whence the “Spirit of Australia”

Last week Qantas forecast a loss of around $300 million for the first six months of 2013-14 and that it would be sacking 1,000 more employees. The call went out for government support to defend its status with the ratings agencies. At the same time pressure mounted on the government to remove existing restrictions on foreign ownership. Standard and Poor’s did not wait. It downgraded Qantas to a junk rating, meaning Qantas will pay higher interest rates on new loans and may find it more difficult to borrow. And Prime Minister Tony Abbott’s response was, “Qantas has to get its house in order. It is a private company and it is incumbent on all private companies to run themselves effectively and profitably.” Or else let it crash?

Education Minister Christopher Pyne ran with the deregulation agenda: “Well Qantas has a unique problem which most other private companies don’t have in Australia and that is it is restricted by legislation in terms of its foreign investment, who can invest in Qantas. Now Virgin doesn’t have that restriction which means that Qantas is hide-bound really so we have to think whether the taxpayer directly supports Qantas, or whether we remove those restrictions and allow it to get foreign investment which also means that it might not necessarily be entirely Australian owned. So it is a problem, and we have to sort through it which we will.”

One can only speculate whether the current “crisis” is being manufactured to put pressure on the government and public to accept a foreign takeover of the airline. Qantas, although privatised, still to some extent fulfils the role of a national carrier. It responds to calls from the government during emergencies, such as bringing home Australians in emergency situations. “Well there’s a whole host of reasons why Australia needs to have a national carrier, but it is a global world and at the moment Qantas can’t compete as easily as it should because it is got this half, 50 percent restriction on its ownership,” Pyne added.

In the lead up to its privatisation, the Hawke-Keating Labor government began the process of deregulating the airline industry in the early 1990s. TAA was incorporated as part of Qantas. Prior to privatisation Qantas had one of the most impressive safety and reliability records in the world. Once privatised, its prime purpose became the maximisation of profits for its shareholders through cost-cutting and global expansion. In 2004, it set up its “low cost” airline, Jetstar, which now has a domestic arm and five international offshoots, mostly in the Asia-Pacific region.

Qantas launched an all-out war on its unionised workforce. It tried all the dirty capitalist tricks in the world to cut costs and boost profits: “independent” subsidiaries, individual employment contracts, labour hire firms, offshore maintenance and deunionisation. Some flight attendants were doing 20-hour shifts. Much of its maintenance work was sent offshore. (See Guardian, “Qantas: slippery slope of privatisation” #1512, 03-08-2011)

CEO Alan Joyce with his obsession with holding 65 percent of the domestic market seems blind to alternatives that might be more profitable. Qantas is expanding in a highly competitive market experiencing surplus capacity. The rise in safety incidents, the near misses, the big question marks about safety and underqualified staff in offshore maintenance facilities have eroded public confidence and respect for an airline which no longer treats Australia as home.

Far from being “The Spirit of Australia”, Qantas now epitomises global capital whose interests are profit maximisation, not those of a national carrier serving the needs and interests of the Australian people. A government guarantee of its loans will not solve the problems facing Qantas. Nor will a government purchase of 10 percent of Qantas’ equity or opening the company up to more than 49 percent foreign ownership. As for the proposal to sell off part of its fleet and rent it back, this is a recipe for future disaster.

The real issues are deregulation and privatisation, not foreign ownership or government intervention. Australia has opened its skies wider than most other countries to foreign operators. In practice, we have all but lost our national carrier. The future for Qantas and the people of Australia lies in the nationalisation of the airline and a tightening of regulations, including re-regulation of wages and working conditions of airline employees and airline safety. Its loyal workforce deserve job security and decent wages and working conditions: this can only be guaranteed by pubic ownership and control.

Next article – Nelson Mandela

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