Should Australia just open up their skies to open unrestricted competition?

[davistev]

Domestic flyers in Australia have been stranded out due to the Qantas closure.

Here is my rant! I am just a passenger but I really do not care what airline I fly between city A or city B or the nationality of the employees. I do care about safety standards. I trust that Australia has appropriate labour laws in place to stop an airline paying $8.75 per hour for flight attendants.
Internationally I can choose to a certain degree if I will fly QF or another airline and this is good in my books.

I have no problem with Delta Airlines, Cebu Pacific or whatever operating between SYD and MEL or Alice and Darwin or wherever and carrying local passengers. Let the passengers decide and let competition do its thing. I do have a problem with QF stranding passengers especially in thise cities with limited alternatives (Alice Springs now cut off).

I have no problem with abolishing all restrictions on all foreign carrier operations to/from and within Australia.

Let the Unions do their thing, let Qantas fly or not, but please - at least allow us passengers a choice of who we can fly.

 

[Boris spatsky]

Deregulating domestic routes and allowing any airline to fly them would be the end of the Australian aviation industry as we know it.

I agree with your sentiment, but not with the proposed solution.

 

[moa999]

Australian skies are already very open.

Any airline or company can setup a new domestic airline (eg we could see Emirates Australia, Singapore Australia etc) -- we already have Tiger Australia which is 100% Singapore owned (and Singapore Airlines has a stake).
There are however a few rules - must have Australian AOC, must use Australian registered fleet, under the supervision of CASA etc.
Apart from Tiger noone else has chosen to do so and look how that worked out.
This means that it remains a relatively level playing field

Internationally however the government will give away rights to practically anynone who can fly into australia with staff on totally different wage levels, regulations and safety standards.

 

[thewinchester]

Short answer No.

Dick Smith made the point, quite clearly during interviews on ABC News 24 yesterday, that allowing of complete open skies in Australia will have disastrous consequences for the industry as a whole.

He noted rightly that a lot of these potential carriers who would want to operate with domestic rights are from nation states where they receive significant protection and far greater wage concessions.

Now, doing so may force competition in Australia, but as history has shown businesses often shut up shop and move offshore when this kind of competition rolls into town.

You could argue that this is a natural progression of economics and business in the 1st world. I however would argue that QF in the category of too big to fail on the basis on the economic impact it would have.

 

[dk4]

Yes, for a limited time, inparticular Emirates must be allowed in ASAP (if they wish), to enable them to save the Melbourne Cup. (Of course with the option for future "easy tansition" to set up a 100% Emirates owned, Australian based company, for continued domestic operations.)

IMO the government must allow Qantas to fail if its management and workers can not compromise and negotiate a solution.

Any resolution imposed on Qantas will not solve its problems, only put a lid on a boiling pot that will blow off again at some point in the future. Mangement and workers must come together to own a resolution, or as a market based business, Qantas must be allowed to fail.

 

[davistev]

Deregulating domestic routes and allowing any airline to fly them would be the end of the Australian aviation industry as we know it.

I agree with your sentiment, but not with the proposed solution.

With all due respect sir, The Australian public have no love for the "Australian Aviation Industry" right now. Qantas will not get many passengers back after this fiasco. I just want to travel from A to B.

Australia does not allow foreign aircraft to operate between Australian cities. The requirement that the aircraft be VH registered is a barrier to free competition within Australia. Why is it okay for SQ, DL, CX to carry Australian passengers internationally but not domestically? I propose that the "VH" requirement is a protectionist barrier.

 

[SeaWolf]

I propose that the "VH" requirement is a protectionist barrier.

Yes, it most certainly is a protectionist barrier, but that's not necessarily a bad thing. That requirement exists so that anyone operating Australian domestic routes will operate them under Australian conditions and will actually establish an Australian carrier that will compete on Australian terms.

For example, suppose fictional carrier Elbonian Airlines (from the fictional country of Elbonia) was allowed to start operating Australian domestic legs with its international aircraft. Its flies into Perth, then carries on to Sydney carrying domestic passengers, for example. The aircraft is crewed by Elbonian citizens, employed under Elbonian conditions (e.g. they are paid a bowl of rice a month). The airline has no Australian office (they have a 1800 number that connects to their call centre in Elbonia) and they employ no staff in Australia at all, instead using 3rd party contractors or the staff that are operating the aircraft for the airport functions. They bring their catering in from Elbonia, frozen in the hold. All their costs are in Elbonia, they have almost no costs in Australia and are paying for everything in Muddies (the national currency of Elbonia). All of the money goes directly to Elbonia.

How is any Australian domestic carrier (even Tiger) going to be able to compete with that? All of the Aussie based carriers would have vastly different overheads and costs, all of their money would stay in Australia and fuel our economy, all of Elbonia Airlines would be gone.

Australia already has some of the most open aviation policy anywhere in the world (in the US, the supposed home of the free market, a domestic carrier must be 75% US owned) but there is most certainly such a thing as taking a good thing too far.

 

[davistev]

Yes, it most certainly is a protectionist barrier, but that's not necessarily a bad thing. That requirement exists so that anyone operating Australian domestic routes will operate them under Australian conditions and will actually establish an Australian carrier that will compete on Australian terms.

For example, suppose fictional carrier Elbonian Airlines (from the fictional country of Elbonia) was allowed to start operating Australian domestic legs with its international aircraft. Its flies into Perth, then carries on to Sydney carrying domestic passengers, for example. The aircraft is crewed by Elbonian citizens, employed under Elbonian conditions (e.g. they are paid a bowl of rice a month). The airline has no Australian office (they have a 1800 number that connects to their call centre in Elbonia) and they employ no staff in Australia at all, instead using 3rd party contractors or the staff that are operating the aircraft for the airport functions. They bring their catering in from Elbonia, frozen in the hold. All their costs are in Elbonia, they have almost no costs in Australia and are paying for everything in Muddies (the national currency of Elbonia). All of the money goes directly to Elbonia.

How is any Australian domestic carrier (even Tiger) going to be able to compete with that? All of the Aussie based carriers would have vastly different overheads and costs, all of their money would stay in Australia and fuel our economy, all of Elbonia Airlines would be gone.

Australia already has some of the most open aviation policy anywhere in the world (in the US, the supposed home of the free market, a domestic carrier must be 75% US owned) but there is most certainly such a thing as taking a good thing too far.

This Elbonian airline sounds a lot like JetStar already. I think Qantas would be happy to operate under the above conditions and have other competitors forced to have a "VH" on their tail for protection reasons.

Thank you for my morning smile.