Qantas does not conceal its distaste for any state support tailored to its rival Virgin Australia, which recently requested a A$1.4 billion ($890 million) bailout from the federal government to ride out the coronavirus-induced downturn.
Alan Joyce, Qantas’s chief executive, said in a television interview on 20 March that it was not up to the government to pick “winners and losers” and that it should treat all carriers equally.
On the same topic, Qantas has been quoted by various media as saying that if Virgin Australia gets that amount, then it should receive A$4.2 billion, if support is in proportion with the carriers’ respective revenue figures.
The war of words between the two carriers goes back a long way.
Back in 2001, Qantas attacked the government’s plans to support two rival domestic airlines – one an offshoot of collapsed rival Ansett and the other Virgin Blue, the predecessor to Virgin Australia.
“The national interest will not be served by limiting Qantas’s chances of success in an attempt to artificially prop up less competitive players,” said then-chief executive Geoff Dixon.
STILL BITTER
A decade later, Qantas’s rival, now known as Virgin Australia, was back in its sights.
In late 2013, Qantas took aim at Virgin Australia’s plans to raise funds from its foreign owners, going so far as to launch an online petition.
It said the market situation was unfair because its rival could raise foreign ownership without the need for any regulatory approval and still retain all the traffic rights given to Australian carriers. Meanwhile, foreign investment in Qantas was capped at 49%.
Qantas said on the petition: “It means Virgin, which will be 80%-foreign owned, can use its unlimited funds to weaken Qantas in the domestic market and cripple our international business. It means foreign airlines having control of an airline which accesses Australia’s valuable air treaty rights.”
The row took another turn when Qantas started seeking government assistance of its own, reportedly via debt guarantees and, more importantly, through changes to the foreign ownership act.
In early 2014, Richard Branson, Virgin Group founder and a shareholder in Virgin Australia, took out full-page advertisements in a number of Australian newspapers to protest suggestions that the national government could offer financial assistance to Qantas.
Branson said at the time: “Qantas has gone cap in hand to the government. If the government fill their hat it will severely damage competition in Australia.”
In the end, the government changed the ownership rule, a move that Virgin Australia welcomed.
TOKYO TUSSLE
Closer to the present, the two sparred over slots to Tokyo Haneda airport in the second half of 2019.
After Japan said it would award Australia two coveted daily slots to Tokyo Haneda, Qantas was quick off the mark with an application to use both.
Hours after Qantas’s submission was made public, Virgin Australia stepped into the fray, saying it wanted one of the slots. Qantas countered that it would be the only carrier ready to commence the new flights by the start of the northern-hemisphere summer scheduling season.
In the end, a desire for more competition on the route prevailed and Australia’s International Air Services Commission said the two carriers would each get a slot.
It remains to be seen how the latest war of words will end. Virgin Australia has just extended a trading halt of its shares while it discusses financing and restructuring options.
So far, it seems the government is not minded to provide the bailout Virgin Australia has requested, even though ministers have said Canberra wants a two-airline sector.
The federal government has, however, announced several relief and assistance packages for the country’s aviation sector – its latest move being to underwrite a minimal domestic network operated by both Qantas and Virgin Australia.
Story by Victoria Bryan of Cirium
