Qantas and Cathay Pacific have both complained about their government-owned or backed rivals, including 80% government-controlled Air New Zealand.
The airlines are taking two vastly different approaches to dealing with this challenge, and Qantas’ call for government help could have big repercussions for Air New Zealand.
Cathay Pacific, which today announced massive capacity reductions and a scheme asking staff to take some unpaid leave, raised the issue of aviation protectionism at the announcement.
“Unlike many of our competitors, we get no government financial support or subsidy. We must make our own way as a commercial airline,” said chief executive Tony Tyler.
“To do this we must above all preserve cash. We have made it clear that we want to keep our team together as far as possible, but we need to take all of our cost factors into account in these unprecedented market conditions.”
Based in Hong Kong, the bastion of free-market capitalism, it is no surprise the airline is forced to go it alone and operate like a normal business would in tough conditions.
But the noises from across the Tasman will be more of a concern for Air New Zealand.
Qantas needs “saving” from “unfair competition” from foreign government-backed airlines, claims the Australian Council of Trade Unions (ACTU), which is meeting with the airline today over its decision to cut up to 1750 jobs.
Describing Qantas as “an essential part of our social and economic infrastructure”, ACTU secretary Jeff Lawrence says, “We are also concerned about the unfair competition Qantas faces from airlines which are owned or propped up by overseas governments”.
These include Singapore Airlines, Emirates, Air China, Malaysia Airlines, Tiger Airways and, of course, Air New Zealand, although it is barely a blip on the radar compared to these massive operators.
Mr Lawrence’s statement reflects concerns shown last week by Qantas chief executive Alan Joyce in an interview with newspaper The Age.
“Some of the other airlines that operate out of here are doing it as government entities. They don't have to make the same returns,” he said.
“They have a sovereign status in terms of funding for aircraft and that does produce an un-level playing field. We have always asked for a level playing field and that is still our position.”
Air New Zealand will be watching the Australian government’s response with interest.
Any intervention or regulation of the Australian aviation market could have a major impact on Air New Zealand, which, while government-owned, is listed on the sharemarket and run as a fully commercial business.
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