Qantas turns up heat on Virgin ownership
The renewed lobbying also highlights nervousness within Qantas about the longer-term intentions of Virgin's largest shareholders, notably Singapore Airlines.
Qantas is concerned Singapore Airlines may use its cornerstone stake in Virgin to influence politicians to allow access to routes between Australia and the US. The Pacific routes are among Qantas' most profitable.
In the lead-up to the election, Qantas has sought to point out it is at a distinct disadvantage to Virgin, of which Air New Zealand, Etihad and Singapore Airlines own more than half.
Qantas argues that, unlike Virgin, it has to adhere to legislation that caps ownership by foreign airlines at 35 per cent. Under the Qantas Sale Act, a single investor can also own no more than 25 per cent in the national flag carrier.
Qantas has renewed its argument that Virgin has circumvented the Air Navigation Act by splitting its business.
The act stipulates Australian airlines have to keep foreign ownership at 49 per cent to benefit from this country's traffic rights on international routes.
The split has allowed Virgin to open its share register to foreign airlines while retaining an Australian designation for its international operations.
Air New Zealand is awaiting approval to boost its stake in Virgin from 20 per cent to 26 per cent, while Etihad has made clear it wants to boost its holdings from 10.5 per cent to 20 per cent. Singapore Airlines has a 20 per cent stake in Virgin.
Qantas bolstered its government relations team last month when former Emirates spin doctor Andrew Parker, a former adviser to former Liberal leader John Hewson, became its chief lobbyist.
The airline's position has some support from the pilots' union,but it emphasised there were inconsistencies in Qantas' argument.
Australian and International Pilots Association president Barry Jackson said the next government needed to reconsider the laws governing Australian airlines.
Mr Jackson said it was clear Virgin had set up a separate holding company for its international operations to get around the intent of the Air Navigation Act. But he said similar questions needed to be asked of the structure of Jetstar affiliates in Asia, which he claimed "similarly seem to sidestep the requirements of the act".
Qantas declined to comment on any discussions with politicians but maintained there should be a "level playing field".
Virgin declined to comment.
Frequently Asked Questions about this Article…
Qantas has stepped up lobbying to pressure senior federal politicians to review whether Virgin Australia is complying with aviation laws. The airline is concerned foreign carriers increasing their stakes in Virgin could give those investors influence over access to lucrative international routes, especially Pacific and US services, which Qantas says leaves it at a competitive disadvantage.
According to the article, Singapore Airlines currently holds a 20% stake in Virgin Australia. Air New Zealand is awaiting approval to increase its holding from 20% to 26%, and Etihad has indicated it wants to lift its stake from 10.5% to 20%.
The article cites two key rules: the Air Navigation Act requires Australian airlines to keep foreign ownership at 49% to qualify for traffic rights on international routes, and Qantas must follow legislation that caps ownership by foreign airlines at 35%. Under the Qantas Sale Act, a single investor can own no more than 25% of Qantas.
Qantas alleges Virgin has split its business so that it can open its share register to foreign airlines while retaining an Australian designation for international operations. The pilots' union also said Virgin set up a separate holding company for its international operations, which they say appears to circumvent the intent of the Air Navigation Act.
Qantas is worried that Singapore Airlines, as a cornerstone 20% shareholder, could use its position to influence politicians to allow Virgin access to routes between Australia and the US—routes Qantas describes as among its most profitable.
The Australian and International Pilots Association (AIPA) president Barry Jackson said the next government should reconsider the laws governing Australian airlines. He agreed Virgin appeared to set up a separate holding company to get around the Air Navigation Act, but also noted similar questions about the structure of Jetstar affiliates in Asia.
Yes. The article notes Qantas recently bolstered its government relations team by appointing Andrew Parker—described as a former Emirates spin doctor and a former adviser to ex-Liberal leader John Hewson—as its chief lobbyist.
Qantas declined to comment on specific discussions with politicians but insisted there should be a 'level playing field.' Virgin also declined to comment on the matter, while the pilots' union acknowledged inconsistencies and called for a review of the laws.
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