The Guardian September 12, 2001


Needed: one public airline

The jobs of 16,000 Ansett workers hang in the air. Thousands of 
passengers could lose their tickets and frequent flyer points. The future, 
if any, of one of Australia's two major airlines is uncertain.

The Australian Services Union is calling on the government to intervene and 
save the airline and the jobs of its workforce.

Ansett is reported to be losing $1.8 million a day. Its owners, Air New 
Zealand, are not in a position to inject the $4 billion or more that are 
required to refit and make it commercially viable.

Private ownership, deregulation, and competition policy along with more 
recent rises in fuel costs, a weak dollar, and recessed economies around 
the world have sent the airline to the wall.

The private airline has in the past received government support when in 
difficulty. It was very lucky that Compass Airlines crashed when it did. At 
the time questions were already being asked about Ansett's future 
viability.

The Hawke Labor Government, on behalf of Ansett, busted the pilots' union.

For years the previous owners of Ansett  Rupert Murdoch and TNT  milked 
the airline without putting back the necessary capital. It was a run down 
airline that was taken over by Air New Zealand.

Air New Zealand recently rejected offers from Singapore Airlines, to 
increase its 25 percent ownership of Air New Zealand to 49 per cent with 
the injection of $1 billion.

The governments of Australia and New Zealand were not enthusiastic because 
it would lead to a restriction of competition. Now a relieved Singapore 
Airlines has backed right off as further details of Ansett's woes have 
emerged.

As The Guardian goes to press there is talk of Ansett being sold to 
Qantas for $1!

The government encouraged competition between the airlines and the entry of 
private sector operators. Qantas, formed out of the former publicly owned 
domestic carrier Australian Airlines and the international carrier Qantas, 
was put on a corporate footing and privatised, with profits becoming the 
main objective.

Fierce competition led to the demise of smaller regional operators. Compact 
was squeezed out as the larger airlines were able to sustain losses for 
longer. More recently Virgin Blue and Impulse entered the sky wars. Impulse 
has since been bought up by Qantas. 

Competition may lead to cheaper services in the short term, but eventually 
results in monopolisation with one or other of the different entities being 
wiped out or swallowed up.

Ansett is now in this situation and Qantas is looking at a virtual monopoly 
unless someone comes to the rescue. At present Qantas has 54 per cent of 
the market and Ansett 39 per cent. Virgin Blue has around six per cent.

The cost cutting war led to contracting out of "non-core" functions such as 
maintenance, food services and airport services. A number of Ansett's aging 
747s were actually grounded at Christmas and Easter because of the 
airline's failure to carry out the necessary safety procedures.

Who knows what the future of Ansett will be?

It may be broken up as other airlines pick off the pieces, it might be sold 
off dirt cheap, and completely taken over by a company like Singapore 
airlines, or it could be completely dismantled.

With Federal elections looming, the Howard Government may come to the 
rescue, and overlook its policy of non-intervention.

None of these measures offer a long-term solution or will prevent future 
crises in the industry, let alone safeguard the jobs of Ansett's workforce 
or those at Qantas or other airlines.

Competition sounds good in theory but in reality it leads to monopoly with 
higher monopoly pricing and concentration on the most profitable runs to 
the neglect of smaller regional and rural areas.

There is absolutely no need for more than one airline to service the small 
population of Australia. It is crazy that there are two or three airlines 
simultaneously making flights on the same routes with empty seats.

The duplication of booking systems, of baggage handling, of accounting and 
all the other aspects of an airline service is inefficient, costly and 
completely unnecessary.

Far from being cheaper, the competition and privatisation of airlines has 
resulted in layers and layers of duplication and hoped-for profits, as well 
as putting into jeopardy thousands of jobs and the safety of passengers.

There is only one way to sort this mess out. That is for one national and 
international publicly owned airline in Australia.

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