Canberra criticised for one-sided support of Qantas

Trade unionists and politicians have criticised Canberra for failing to seek a stake in Qantas (QF, Sydney Kingsford Smith) in return for billions of taxpayers’ dollars in financial support granted to the flag carrier during the COVID-19 pandemic, expressing concerns of the impact on the competitive playing field going forward.

The Transport Workers Union estimates that by the end of 2021, Qantas will have received AUD2 billion Australian dollars (USD1.4 billion) in federal aid. “By any stretch of the imagination, AUD2 billion should warrant a guarantee on return for taxpayers,” TWU national secretary, Michael Kaine, told The Guardian Australia newspaper. “In many countries around the world, large amounts of investments in airlines include equity stakes, or the potential for equity stakes, as we have seen in New Zealand, Germany, Korea, Hong Kong, and others.” He did not clarify the tally.

A funding break-down provided by Financial Review said the figure was closer to AUD1.5 billion (USD1.1 billion), including AUD174.4 million (USD128.6 million) under the government’s International Aviation Support (IAS) package; plus AUD144.8 million (USD106.8 million) under the half-price airfare campaign to kick-start travel demand announced at the same time as the IAS. In addition, Qantas was receiving AUD726 million (USD535.6 million) under the JobKeeper wage subsidy scheme; AUD102 million (USD75.2 million) in federal fee refunds; AUD276 million (USD203.6 million) to underwrite key domestic flights and overseas repatriation services; and AUD110 million (USD81.1 million) for freight assistance. The Guardian added that Qantas was also receiving assistance from the state governments of New South Wales, Queensland, and Victoria in the form of tax breaks and tourism funding.

In contrast, its closest rival, Virgin Australia (VA, Brisbane Int’l), fell into administration last year after the government refused to bail it out. It was estimated to have received about AUD368 million (USD271 million), while regional airline Rex – Regional Express (ZL, Wagga Wagga) was estimated to have received about AUD150 million (USD110.6 million) in government support.

Qantas was not immediately available for comment, but a company spokesperson told The Guardian it was no surprise the airline had received the lion’s share of government support seeing it held 70% domestic market share and was the only Australian airline that flew internationally. He pointed out the company had lost AUD16 billion (USD11.8 billion) in revenue since the start of the pandemic and was on track to lose another AUD2 billion (USD1.4 billion) this year, on top of an AUD2.7 billion (USD1.9 billion) loss last year. The airline told Financial Review most of the aid was aimed at preserving jobs. “The government’s support has been significant, but we’ve raised more than AUD2.6 billion (USD1.9 billion) in debt and AUD1.4 billion (USD1 billion) from shareholders to get through this crisis,” it said.

In fact, Qantas has become one of the most financially secure carriers anywhere in the world, with its market position “stronger than it has ever been,” chief executive Alan Joyce declared in May. The airline’s stock surged 120% from a March 2020 low—almost double the return of the Bloomberg World Airlines Index—and its market value has swollen to AUD8.9 billion (USD6.7 billion). Analysts said the airline, by far the biggest player in the market, benefited from the shut-down of international borders (only due to re-open in mid-2022) and the subsidised domestic travel scheme that jump-started local tourism. The airline added 45 domestic routes during the pandemic.

But Kaine criticised Canberra for failing to tie any conditions to the funding for Qantas. “It has failed to set down any rules on retaining jobs, banning outsourcing, ensuring air travel to regional Australia, capping senior executive salaries, banning bonuses, and banning dividends,” he said.

The government has consistently opposed taking a stake in Qantas.“It is not the government’s intention to nationalise airlines,” former deputy prime minister and transport minister, Michael McCormack, said in May last year.

However, opposition MP and transport spokesperson, Catherine King, has criticised what she called the government’s “band-aid” approach in implementing help schemes but failing to plot the entire sector’s recovery. “Almost 18 months into this pandemic and the government still has no plan for how to support Australian aviation,” she said. “[It has] spent billions of dollars propping up airlines, but they have little to show for it.”