Coalition Policy Set To Privatise Airlines

So what would be the credits and debits associated with privatisation as laid down in the Coalition’s policy document?

Australian Aviation believes that the senior management of both affected carriers are fairly keen on the proposal. And for good reason. Australian Airlines would be the most affected as it would effectively transfer its total ownership to the marketplace and thus operate under the guise of a public company. At present Australia is of course a statutory authority and is thus forced to operate under the day-to-day operational dogma of the public service board – hardly an appealing asset for any company in today’s tough and aggressive business world. Freeing Australia of its public service shackles would immediately allow it to vastly improve its ability to hire the staff at commercially accepted remuneration levels (a major problem TAA had when seeking a replacement for Frank Ball) while also giving the airline the opportunity to retrain and relocate staff where needed to ensure maximum productivity and system at all times. In short, Australia would become more like Ansett in its day-to-day functioning, which anyone in aviation would generally consider to be a positive move.

The Coalition policy provides the opportunity for existing Australian Airlines staff to purchase shares in ‘their’ company. With another good profit on the board! Am sure most would agree that it is indeed a secure investment. The problems with accrued superannuation have now also been laid to rest and this would not become an impediment to the fiscal attractiveness of the company in the marketplace. On this basis, present official estimates suggest that the selling of the government-owned domestic would raise between $400m and $600m. Obviously, this would be a good return for the Government and through it the people of Australia.

What has to happen before the airline is floated though is a clarification of what will replace the existing TAP. This is basically stated in the Coalition’s policy doctrine though may well be fine-tuned to suit the coming May Enquiry recommendations or even the outcome of a successful TAP challenge in the High Court that East West is presently pursuing. Only with this specifically known, and passed by Parliament as law, would it be fair on either Ansett or East-West as it would be unacceptable to introduce some form of deregulation whilst the Government owned one of the players.

So for Australian Airlines, a public company structure and an ending of the restrictive and anti-competitive TAP would be a real step towards the new and revitalised image that the carrier is presently seeking.

On the international scene, the sale of Qantas poses a different set of questions. For starters, Qantas already is a public company and this is probably one of the primary reasons it appears to operate more effectively than its smaller cousin. Additionally, the sale of shares in our national carrier would be limited to a minority, probably not even 49% to begin with, to ensure that the Australian people at all times control the airline. In this way we can ensure that Qantas’ objectives in relation to bilateral negotiations, etc are never influenced by external interests. To some extent, similar philosophies don’t presently survive in New Zealand and they now have a situation where their national carrier has to compete domestically with a foreign-owned airline. While Air New Zealand would like to retaliate against the Ansett Group’s Kiwi invasion its threat to begin an Australian domestic carrier is just so much hyperbole.

Qantas are also happy about getting their interline rights restared, though one begs the question as to why they were taken from Qantas in the first place back in 1979. To our knowledge, there is no official explanation for this and regrettably those accountable for such actions at the time have since melted into the bureaucratic woodwork in the best ‘Yes Minister’ tradition!

With these rights restored Qantas feels it can be much more profitable though due to the introduction of the Boeing 767 the carrier effectively has less use for this now than it would have had a few years back. With the upsurge in inbound tourism though, a quick rescheduling of some key ferry-type 747 domestic sectors would provide Qantas previously unattainable revenues that would also allow it to play host to a number of other international carriers. This would no doubt shake up the domestics a little and have them marketing a more available range of discounts and tourist fares than are presently advertised as being of great value but are rarely available when you need to book them.

Nineteen eighty-six is a year in which privatisation is deemed not to be a dirty word. The sale of Government ownership in our carriers, plus the scrapping of the Fringe Benefits Tax (which is costing travellers of dollars per annum in increased fares) has won considerable support from senior airline executives. It will be interesting to see if this level of support is now carried through the populace at large when the next federal election takes place.