Australian government cool on stake in Qantas

Australian Treasurer Joe Hockey has indicated he would resist the government taking a stake in Qantas, in comments reported on Saturday, after calling for a debate on the national carrier's future.

A government buyback of 5 or 10 per cent of Qantas has been suggested as a measure to help the airline if there is to be no lifting of current foreign ownership restrictions on it, but Hockey appeared cool on the idea.

"Of course, the government is very, very reluctant to own an airline," the Treasurer told The Weekend Australian newspaper.

Qantas claims that it operates on an uneven playing field against rival Virgin Australia, which is now majority-owned by state-backed carriers Singapore Airlines, Air New Zealand and Abu Dhabi-based Etihad.

Qantas claims that Virgin's financial backing means it can set uncompetitive low prices to win customers from it while it, under the Qantas Sale Act dating from 1995 when the airline was privatised, can only have 49 per cent foreign ownership.

Hockey last week called for a debate on whether these restrictions should be lifted.

"The first question is: do Australians want to retain a national carrier and do they want to retain shareholding restrictions on our national carrier?" he said on Friday.

"If the answer to both those questions is yes, as I said yesterday, there is a price that needs to be paid.

"We will carefully consider all the options, but the fact of the matter is these issues need to be dealt with.

"I am not someone that is prepared to kick the can down the road on issues. If decisions need to be made, they will be made."

The debate has triggered a sharp response from Virgin Australia, which has urged the government to give the airline the same assistance as provided to Qantas.

"Virgin Australia has succeeded against the odds, in a very difficult marketplace, with a major and dominant competitor three times its size that appears intent on flushing it out of the market," Virgin Australia's chief John Borghetti said.

"If any government support was given to the dominant player, we would expect the same level of support."

Transport Minister Warren Truss said the government was "not prepared to fund a market-share battle between our major airlines" but it was keen to ensure Qantas was commercially viable.

"I think all Australians want the red kangaroo to continue flying around the world and particularly in our own country," he said.

SOURCE