Alan Joyce: Foreign investment cap on Qantas needs to be axed

Alan Joyce says Qantas risks being left on the sidelines of a consolidating global airline industry.

Qantas chief executive Alan Joyce.

Qantas boss Alan Joyce says the carrier will be left on the sidelines of a consolidating global airline industry unless the federal government revisits and relaxes the company’s restrictive foreign ownership cap.

The federal government last relaxed the foreign investment caps on Qantas in 2014, when the airline posted a $2.8 billion loss on the back of massive writedowns across its fleet and the announcement of a major restructure aimed at righting its balance sheet and resetting its cost base.

Those changes to the Qantas Sale Act — designed to spur on new investment in the then ­struggling airline — resulted in its foreign ownership being limited to 49 per cent, ownership by ­foreign airlines to 35 per cent and foreign ownership by a single investor to 25 per cent.

But Qantas’s main domestic rival, Virgin Australia, remains quarantined from the same investment restrictions, which Mr Joyce says has created an un­developed playing field.

“We still have an issue with the Qantas Sale Act. It still doesn’t give us the same benefits that our competition gets and eventually we think that some day some government will have to address it,” Mr Joyce told The Australian after the airline’s full-year results.

“I think any business will say to you that they want an equal position compared to the competition. We are no different in that.”

Peter Harbison, executive chairman of CAPA-Centre for Aviation, said the imposed caps were a relic of times when governments put them in place to protect once publicly owned assets as they were being privatised.

“Today, restrictions on foreign ownership are no more than protectionism. They were originally partly about ensuring safety, but that is pretty much history,” Mr Harbison said. “There was never and still is not any reason to apply unique ­restrictions on Qantas, aside from dumb inertia. And of course political self-interest.”

But Mr Harbison said they served no purpose in the capital-intensive airline industry that was increasingly consolidating across nations and continents.

“Every airline will tell you that they want to be part of consolidation,” Mr Joyce said. “BA (British Airways) and ­Iberia merged, Air France and KLM, Lufthansa and Swiss — but unfortunately the way that the Qantas Sale Act is structured there was no way that was allowed (for us).

“We have zero per cent airline investment today so it’s irrelevant to where we are. But for the future, if you think global aviation is going to come together like it has in Europe and North America, that has to be part of that.”

Mr Joyce said that while the issue of foreign investment caps was not at the top of his agenda, and that no time was being spent on lobbying the government, it ­remained an issue that would need to be addressed.

“I think it’s an eventual thing for some future government to look at if it wants Qantas to be involved in airline consolidation in the region when it occurs but we are not focused on it right now,” he said. “We can never be majority-owned by anyone but Australians, that’s the way the act is structured. So for us it’s never going to be something on the table, but it is on the table for Virgin and they could easily be owned by the Chinese and they are already majority foreign-owned.”