Bridget McKenzie’s flying ‘thought bubble’ on splitting up airlines blasted

Critics have blasted a suggestion by opposition transport spokeswoman Bridget McKenzie to investigate divestiture powers for the airline industry in the government’s competition review.

Nationals senator Bridget McKenzie. Picture: NewsWire / Martin Ollman

Business groups, the Albanese government and a former ACCC chairman have blasted a suggestion by opposition transport spokeswoman Bridget McKenzie to investigate divestiture powers for the airline industry in the government’s competition review.

Nationals leader David Littleproud appeared to distance himself from the suggestion on Monday, telling Sky News it was not Coalition policy “because we haven’t got the evidence”, but maintained that the government should be “open-minded” and “listen to the [Australian Competition & Consumer Commission] about what tools they need”.

On Monday morning, Senator McKenzie called for divestiture to be considered in the government’s competition review.

“[Jim Chalmers’s] competition review will be a failure if it does not address the role of divestiture in the Australian aviation sector,” Senator McKenzie wrote in an opinion piece in the Australian Fin­ancial Review.

She noted a Treasury paper this year found Qantas tended to raise prices when its subsidiary Jetstar entered a route, as compared to lowering the price when a competitor did the same. It also found the “entry of Jetstar lowers average airfares and provides consumers with more choice”.

Transport Minister Catherine King ridiculed the “evidence-free and damaging thought bubble” by Senator McKenzie and pointed to the apparent discrepancy between Coalition frontbench positions: “You would think any serious political party would have thought deeply about such a significant policy, but this thought bubble didn’t last the light of day.”

Former ACCC chairman Graeme Samuel, now chair of industry group Airlines for Australia and New Zealand, accused Senator McKenzie of being “anti-Qantas” and using “populist politics at its lowest level”.

“I would’ve thought that even the Nationals were better than that but it appears not,” he said.

Senator McKenzie later on Monday clarified she was not calling for the forced break-up of Qantas and Jetstar: “I explicitly rule out needing to break up Jetstar and Qantas.” She said she was asking the Treasurer what he would do “about addressing the lack of competition in the Australian aviation sector”.

Business Council of Australia chief executive Bran Black said divestiture powers had been rejected by “review after review” because “they don’t work … so we have to stop thinking that the answer to cost-of-living issues is divest­ment of our largest companies. Counterproductively, divestment can increase costs and reduce job security. Those are the last things we want to see.”

Australian Chamber of Commerce and Industry chief executive Andrew McKellar said Senator McKenzie’s call was “premature … We support getting a very competitive and contestable aviation market in Australia, but by no means is it clear that the best way to do this is through the introduction of divestiture powers … there are real risks in going down the divestiture pathway”.

“It could lead to unintended consequences, and if you tried to break up Qantas and Jetstar, then really there’d be no certainty that you’d get the outcome that was intended,” Mr McKellar said.

A Qantas spokesman said the airline “welcomed competition” and over the past year “domestic and international airfares have continued to trend down adjusted for inflation”.

“The ACCC has been actively monitoring the aviation industry for the past four years and has made no findings of anti-competitive behaviour,” he said.

Virgin Australia declined to comment.