Qantas turns up heat on Virgin ownership

Qantas has stepped up efforts to pressure senior federal politicians to take a closer look at whether Virgin Australia is abiding by aviation laws, after foreign airlines boosted their stakes.

Qantas has stepped up efforts to pressure senior federal politicians to take a closer look at whether Virgin Australia is abiding by aviation laws, after foreign airlines boosted their stakes.

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.

Related Articles