Is it time for the ACCC to lose its power to veto international JVs?

[Forg]

QF should just do smaller aircraft on such routes
Maybe the A321XLR

If they fly Boing! aircraft where passengers can just open a hole in the fuselage & climb out, they can eliminate aisles altogether - now that is efficient loading! And without aisles they don't need any flight attendants; and let's face it the co-pilot is mostly there for safety/backup reasons which isn't a major focus for that market - so one employee to fly the whole thing.
Cheap!!!

 

[elanshin]

With the prices Chinese carriers are charging currently is it even worth QF’s time?
Some of the flights I’ve looked at from Australia to China are $1100-1400 one way in J. Now admittedly there is a few of them I’m not keen on and no hurry to fly with again but a couple of them I rate highly

Unless they deck the 321XLR with proper J, CX would be a more attractive option albeit one hop.

 

[jase05]

Unless they deck the 321XLR with proper J, CX would be a more attractive option albeit one hop.

MF are a very good airline IMO and I’ve found their J product really good. They had a J sale recently MEL/SYD to dozens of ports in China 1 stop starting at $1090 one way

 

[MEL_Traveller]

Lucky over at onemileatatime has written an article explaining airline relationships, including codeshares and joint ventures: Airline Alliances, Codeshares, And Joint Ventures Explained

 

[RSVKanga]

JVs have their place, but its crazy to permit a JV between the only two carriers serving a market.

Unsure why you copied and pasted this exact line @muppet said earlier in this thread a while back, but no, there are four carriers in the Australia-Japan market and the ACCC rejected the QF-JL JV. There is a whopping nine carriers in the Australia-China market yet the ACCC rejected the QF-MU and QF-CX JVs.


IMO the watchdog quite clearly has no clue on enforcing “competition” laws, are harming Australia’s national interest by disrupting Australian companies’ global commercial interests that help them grow, and they also have no clue about competition regulations in other countries that contradict with their reasonings (eg: due to the large number of international airlines in China, China’s government only allows only one Chinese airline per route to Australia - yet the ACCC thinks other Chinese airlines will be disincentivised from flying PVG-SYD if the QF-MU JV is approved….but China’s Government prevents other Chinese airlines flying the route anyway!)

 

[dajop]

I wonder, if VA were to get a new (airline) investor who then wanted to form a significant JV with them, whether ACCC should have power to review the JV or not, or best to leave it up to the market?

 

[MEL_Traveller]

Unsure why you copied and pasted this exact line @muppet said earlier in this thread a while back, but no, there are four carriers in the Australia-Japan market and the ACCC rejected the QF-JL JV. There is a whopping nine carriers in the Australia-China market yet the ACCC rejected the QF-MU and QF-CX JVs.


IMO the watchdog quite clearly has no clue on enforcing “competition” laws, are harming Australia’s national interest by disrupting Australian companies’ global commercial interests that help them grow, and they also have no clue about competition regulations in other countries that contradict with their reasonings (eg: due to the large number of international airlines in China, China’s government only allows only one Chinese airline per route to Australia - yet the ACCC thinks other Chinese airlines will be disincentivised from flying PVG-SYD if the QF-MU JV is approved….but China’s Government prevents other Chinese airlines flying the route anyway!)

There may be 9 carriers between AU and China, but my understanding is that there is no route duplication. None of the 8 chinese carriers are permitted to compete against each other. So there’s a single carrier SYD-PVG for example.

The joint venture would then tie the only aussie and the only chinese carrier on that route.

 

[RSVKanga]

I wonder, if VA were to get a new (airline) investor who then wanted to form a significant JV with them, whether ACCC should have power to review the JV or not, or best to leave it up to the market?

I think JVs shouldn’t be completely up to the market without any approval, but at the same time the ACCC’s actions regarding JVs have been gravely ill-informed and myopic, so I think the most sensible option is for the Department of Transport to assess and rubber-stamp (or reject) JV applications rather than the ACCC. The vast majority of first world countries have their Department of Transport overlook JVs rather than their “competition watchdog”

The Department of Transport, unlike the ACCC, can also make decisions regarding JVs on national interest grounds in addition to competition. ACCC doesn’t consider the national interest and only considers short-term consumer interests. You mention VA, but VA is an almost 100% foreign owned company, and if they do plan out a significant JV with another foreign airline, the Department of Transport will have the power to reject that hypothetical JV if it’s not in the national interest. eg: If the foreign-owned VA propose to collaborate with another foreign airline in a way that could significantly hinder the profits of our Australian-owned national carrier, that clearly goes against Australia’s national interest. I think Qantas profit is in our national interest since it’s majority Australian owned and the vast majority of its profits hence stay onshore. The vast majority of VA profits at the moment fly away to Boston, USA.



TLDR: ACCC treat the Australian-owned QF and foreign-owned VA equally. This should not be case, and Australian companies' interests should be prioritised over those of foreign-owned airlines. This could/should happen with the Department of Transport overseeing JVs rather than the ACCC.

Post automatically merged: Monday at 4:49 PM

The joint venture would then tie the only aussie and the only chinese carrier on that route.

And at present there are no other long-haul Australian airlines, let alone long-haul Australian airlines willing to fly SYD-PVG. So I wonder what on earth is going on in the head of Gina Cass-Gottlieb and her faceless colleagues?

 

[RooFlyer]

TLDR: ACCC treat the Australian-owned QF and foreign-owned VA equally. This should not be case, and Australian companies' interests should be prioritised over those of foreign-owned airlines.

That's called protectionism. Its all very well, until other countries 'prioritise' their companies over foreign competitors (Australian). For instance, the UK government might force LHR to take landing slots off the foreign airline Qantas and give them to BA, to protect "the national flag-carrier" over foreign competitors. France might force Airbus to prioritise aircraft deliveries to European airlines, not those nasty competing foreigners; ditto the US Govt and Boeing. How would Qantas be off then?

Its like import tariffs. We can impose 'em to protect our industry, but if everyone did it, we lose because of our high cost of manufacturing.

Economists and policy makers learned these lessons eons ago. You can't be myopic and just have a narrow view, but rather need to consider the national interest.

 

[Quickstatus]

national interest.

national interest

Until we define what this is, I think we are going round and round in circles.

From where I sit, the ACCC exists only because of the Competition and Consumer Act 2010. Anyone who wants the Act to change wrt to this matter should get it changed. But I am happy with the implementation of the Act wrt to this matter.

Department of Transport to assess and rubber-stamp

Dont forget the Minister who "crashed" not so long

 

[RSVKanga]

That's called protectionism. Its all very well, until other countries 'prioritise' their companies over foreign competitors (Australian). For instance, the UK government might force LHR to take landing slots off the foreign airline Qantas and give them to BA, to protect "the national flag-carrier" over foreign competitors. France might force Airbus to prioritise aircraft deliveries to European airlines, not those nasty competing foreigners; ditto the US Govt and Boeing. How would Qantas be off then?

This is not a tit-for-tat fairytale land. Just because Australia makes a decision to favour its Australian-owned airlines over foreign-owned airlines domestically doesn’t mean your doomsday scenario above will even come close to eventuating.

But let’s consider your point in the reverse situation. You clearly don’t realise the reverse situation in the point you make is already happening. Canada, in 2024, forces all its domestic airlines to be 51%> Canadian owned. The USA, in 2024, forces all of its domestic airlines to be at least 75% American owned. Japan’s Government, in 2024, only allows for its airlines to be at most 33% foreign owned (hence QF’s stake in GK is 33%). Qantas isn’t allowed majority control of Jetstar Asia because the Singapore Government restricts its airlines to be at least 51% Singapore owned. The EU, UK have similar rules. So much protectionism alive, well and thriving in 2024! (Gasp! ) I don’t see these rules being relaxed anytime soon, if anything they’re more likely to be tightened. Australia is late to the party, so why shouldn’t Australia introduce a maximum foreign ownership limit for domestic airlines, to protect the national interest? In your hypothetical titfortat logic, this should happen, right? Australia is the only developed country allowing new domestic airlines to be 100% foreign owned, and that’s doing a disservice to our country.

This point was brought up by the former Qantas CEO not that long ago:

“We’re in the position in Australia where any carrier can be 100 per cent foreign owned and that doesn’t happen anywhere else in the globe. In the US, you can only be 25 per cent foreign owned. I think in Japan to have an airline you can only have 33 per cent of foreign equity on it.

“So what’s great for the Australian travelling public is they’ve got these big American private equity companies setting up airlines here that are 100 per cent owned by them and you’ve got the Singaporean companies investing in an airline like Rex.”

Qantas is 82 per cent Australian owned, “the biggest percentage we’ve ever had since we were privatised”, Mr Joyce said.

Mr Joyce described Qantas as “the little Aussie battler” that was going up against big foreign investments.

https://www.news.com.au/travel/travel-advice/flights/qantas-ceo-labels-national-carrier-the-little-aussie-battler-as-competition-heats-up-for-2022/news-story/68a6fd341ca2687baaaac39c51f4f9b7?amp

Qantas is restricted to 51>% Australian ownership to protect national icon status, more than it is to protect the national interest. Imposing a maximum foreign ownership limit on all airlines, including VA and Rex will bring them back down to earth and make em’ fight for survival, but all for the greater good as Australia simply starts enforcing the national interest like what other developed countries have been doing for decades and will continue to do. The EU is considered as a single country in this case (where EU airlines must be at least 51% EU owned), so it’s mostly third world countries who join Australia in allowing 100% foreign owned airlines to be based their country.

 

[RooFlyer]

But let’s consider your point in the reverse situation. You clearly don’t realise the reverse situation in the point you make is already happening. Canada, in 2024, forces all its domestic airlines to be 51%> Canadian owned. The USA, in 2024, forces all of its domestic airlines to be at least 75% American owned. Japan’s Government, in 2024, only allows for its airlines to be at most 33% foreign owned (hence QF’s stake in GK is 33%). Qantas isn’t allowed majority control of Jetstar Asia because the Singapore Government restricts its airlines to be at least 51% Singapore owned. The EU, UK have similar rules. So much protectionism alive, well and thriving in 2024! (Gasp! )

Yair ... that's not 'protectionism'. You've moved the goal posts again . Have a read of the linked article:
Protectionism: Examples and Types of Trade Protections

Protectionism refers to government policies that restrict international trade to help domestic industries. Protectionist policies are usually implemented with the goal of improving economic activity within a domestic economy but can also be implemented for safety or quality concerns.

So, going back to your original (and oft-repeated) point:

TLDR: ACCC treat the Australian-owned QF and foreign-owned VA equally. This should not be case, and Australian companies' interests should be prioritised over those of foreign-owned airlines. This could/should happen with the Department of Transport overseeing JVs rather than the ACCC.

That's a straight protectionist argument and nothing to do with airline ownership. As I said, could be fair enough domestically, but it invites retaliation which will ultimately harm the Australian player (AKA Qantas). Ta-ta LHR.

The repeated arguments for special treatment of Qantas, protection from competition, protection from regulators, protection from everyone and everything really, to me just highlights what a weak and pathetic outfit Qantas is. Can't be run as a business unless allowed to rip off customers (ghost flights), sack workers illegally and so on, so must be shielded. I don't believe you can be serious in all this bluster and are just providing a stir, and I've frequently said how well its done.

 

[Quickstatus]

Qantas is restricted to 51>% Australian ownership to protect national icon status,

Imposing a maximum foreign ownership limit on all airlines

You quote Geoff Dixon but you decline to say his solution was actually the repeal of the Qantas Sale Act and removal of foreign ownership restrictions of the "national carrier".

 

[RSVKanga]

Ta-ta LHR

but it invites retaliation

Any real life example of this fairytale tit-for-tat happening? Again, according to that logic, Australia should have retaliated against Singapore as they don't allow QF to own more than 49% of Singapore-based Jetstar Asia, while Australia allows Singaporean companies to own as much % of any non-QF domestic airline as they want. But no, there's no retaliation happening, right?

nothing to do with airline ownership

I think airline ownership actually forms the core rationale for 'special treatment' of Qantas to serve the national interest. Qantas is Australian-owned and hence the vast majority of Qantas profits stay right here in Australia. So if Qantas proposes a JV with another airline, it will mean more profit for QF which stays in Australia. Permitting a major JV between VA and another big foreign airline on the other hand I think is not only harmful to Australia as it would allow mass competition against our Australian-owned national carrier, reducing their profit and and hence reducing amount of $ staying in Australia, but also the fact that the bulk of profit made from a VA in a JV will fly away straight to Boston, USA. Is that good for our country or not?

The ACCC doesn't and can't consider ownership. It's not their job. The Department of Transport on the other hand can consider ownership and competition factors and make a decision that's in the country's best long-term interests rather than short-term consumer interests. It's what every other developed country does.

The repeated arguments for special treatment of Qantas, protection from competition, protection from regulators

I think this is quite an appropriate approach as it is the only major airline group in Australia that is Australian-owned and hence keeps the vast majority of its profits onshore, in Australia. This doesn't apply to any of its domestic competitors, and obviously doesn't apply to its international competitors. Maybe in the future if there's another major Australian airline that's also majority Australian-owned, then they can also get special treatment.

 

[oz_mark]

Any real life example of this fairytale tit-for-tat happening? Again, according to that logic, Australia should have retaliated against Singapore as they don't allow QF to own more than 49% of Singapore-based Jetstar Asia, while Australia allows Singaporean companies to own as much % of any non-QF domestic airline as they want. But no, there's no retaliation happening, right?

Jetstar Asia is hardly a domestic airline. Any international airline in Australia must be owned by at least 51% Australian interests.

 

[RooFlyer]

@RSVKanga none of your replies actually address the bits that you’ve quoted. For instance, you reply to my pointing out what protection actually was ( it wasn’t about airline ownership), with a comment about airline ownership.

With such consistently verbose, logically scattergun arguments, I still don’t believe you are serious. Certainly can’t be taken seriously.

 

[dajop]

Any international airline in Australia must be owned by at least 51% Australian interests.

At least on paper!

 

[RSVKanga]

Any international airline in Australia must be owned by at least 51% Australian interests.

Then why is Virgin Australia almost 100% foreign owned? As far as I'm aware, Japan, Indonesia, NZ and the Pacific Islands are not part of Australia.

 

[oz_mark]

Then why is Virgin Australia almost 100% foreign owned? As far as I'm aware, Japan, Indonesia, NZ and the Pacific Islands are not part of Australia.

VAI is not 100% foreign Owned (on paper)

 

[MEL_Traveller]

L LL lol lllll LL l

Until we define what this is, I think we are going round and round in circles.

From where I sit, the ACCC exists only because of the Competition and Consumer Act 2010. Anyone who wants the Act to change wrt to this matter should get it changed. But I am happy with the implementation of the Act wrt to this matter.


Dont forget the Minister who "crashed" not so long

Indeed. The ACCC’s title gives us a good indication… ‘consumer’ protection rather than protection of profits!!

While there is strong competition to China as a whole, the competition the competition to individual cities is barely there when you look at the non-stop market.

I wonder if the introduction of visa-free travel to china may possibly have an impact on any JV proposals as domestic connections may be less daunting and less inconvenient? Might be too late in the case of QF however.