Virgin CEO Paul Scurrah says airline monopoly will damage economy

Virgin chief says an airline monopoly would be an economic disaster, but also argues Qantas too should get billions if needed.

Virgin Australia CEO Paul Scurrah (right) with Qantas rival Alan Joyce in 2019. Picture: AAP

Virgin Australia has warned it would be economically disastrous for the country to have only one airline flying post-coronavirus, as it stepped up calls for government assistance.

The Australian revealed this week that CEO Paul Scurrah had requested a $1.4bn loan facility from government to keep Virgin Australia alive in a prolonged crisis.

Mr Scurrah said talks were continuing with government and “other sources of capital” and he was hopeful a decision would be made soon.

“The investment I’m asking for is not a handout, it’s a hand up, because it’s a repayable instrument and it ensures we fire back up quickly when the economy recovers,” Mr Scurrah said.

“It puts thousands of people back to work quickly, it puts millions of Australians back in the year and the investment ensures we get to maintain all the benefits we enjoy today from having two healthy competing airlines immediately.”

He said the “alternative” of a possible airline monopoly was not in the public interest, because it could take years for another airline to enter the market.

With “every single airline in the world in distress”, there was no one waiting in the wings to take Virgin Australia’s place should it not survive.

“If only one airline was to make it through (the crisis) there would be a long period of a monopoly which would be very bad for the economy,” said Mr Scurrah.

“The community is the one that stands to lose the most because they lose choice, they lose access and they lose importantly fairer prices.”

News of Virgin’s request for a $1.4bn loan facility was quickly followed by Qantas suggesting it should receive proportional government assistance of $4.2bn.

Although Qantas airline conceded it did not need that sort of assistance, after raising $1.05bn against seven 787-9 aircraft, it indicated it was only fair for the government to treat airlines equally.

Mr Scurrah said he agreed.

“If that’s what they need they should get that support from government as well, because it’s a level playing field and we’ve always advocated for sectoral support,” he said.

“I’ve been very active and very keen to make sure that rivalries are put aside at this point in time … and if that’s what Qantas is requesting then I would support them getting it.”

He insisted that it would be in the government’s interest to support two companies to the tune of $5.6bn.

“You’ve got to look at the bigger picture here – with the biggest and most unprecedented crisis our economy is likely to see let alone the airline industry, I think you’re going to see the economic pain beyond this, of not having a competitive and robust airline industry, will go on for at least a decade,” said Mr Scurrah.

Shares in Virgin Australia and Qantas have both been hammered in recent months, but have gained some ground in the last week after announcing significant cuts to flights and employees.

On Thursday Virgin Australia shares were trading down 4.4 per cent at 8.6 cents, and Qantas shares were down 4.7 per cent at $3.22.