Qantas shoots down proposal to increase foreign airline access

Qantas has warned politicians against any move to let foreign-owned international airlines fly Australian domestic routes.

The new QANTAS Boeing 787 Dreamliner aircraft is followed by an A380 Airbus as it arrives on its first flight into Sydney. (AAP Image/Dean Lewins)

The national carrier has again warned politicians against any move to let foreign-owned international airlines fly Australian domestic routes, insisting it would wipe out “significant” numbers of jobs, especially in the regions.

In a new submission, the Qantas Group says that such a move would “destabilise” the nation’s aviation market with foreign carriers “cherrypicking” busy routes “and destroying the regional eco system”.

Such a plan would also “eliminate significant numbers of Australian based jobs, particularly in the regions, as well as long term investment,” Qantas (QAN) says in its submission to the Senate inquiry into air services to the bush.

The idea of allowing aviation cabotage rights — where foreign carriers do domestic routes — was raised during the recent West Australian parliamentary inquiry into regional airfares in the state. That inquiry noted calls to remove cabotage restrictions on flights to Broome and Karratha, but said this was strongly opposed by airlines.

It was also considered by the federal government in 2015 after the matter was raised by the Harper competition review — which said there would be “considerable benefits” from removing cabotage restrictions on remote and poorly-served domestic routes — and a green paper on Northern Australia.

But it has always been opposed by Qantas and the government said in its response to the Harper review that it had no “immediate” plans to ease cabotage rules.

In its new submission, Qantas says: “If aviation cabotage was ever entertained as a policy, the mitigation strategies for the Group are neither commercially nor politically palatable as the business would be compelled to pursue strategies to defend its competitive position against lower cost Asian carriers.”

As well, there is further concern “that foreign airlines will likely enter the cabotage market not for immediate commercial reasons, but for strategic considerations with the objective of inflicting material damage to Australian carriers and the likelihood that further lobbying will evolve the policy to include more cities and more lucrative routes,” the submission says.

In Australia, foreign airlines wanting to compete in the domestic market can do so by setting up an Australian-based subsidiary, so long as they meet national interest tests, which is how Virgin Blue and Tiger Airways were set up.

Airlines for Australia and New Zealand — whose members include Qantas and Virgin Australia and their low-cost subsidiaries, regional carrier Regional Express Holdings and Air New Zealand — has also made plain that it opposes easing the cabotage restrictions.

In its submission to the Senate inquiry, the group says such a move would have “negative effects on investment, employment and safety standards”.