PM Tony Abbott Open to Higher Gov’t Stake in Qantas, But Virgin Australia Demands Same Level of Support from Federal Gov’t

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By Vittorio Hernandez | December 3, 2013 10:05 AM EST

Australian Prime Minister Tony Abbott said on Monday that he is open to the idea of the federal government increasing its stake in national flag carrier to provide it with financial power amid greater competition from rival air carrier Virgin Australia.

However, the very same airline is demanding equal treatment from the Australian government. In an open letter, Virgin Australia Chief Executive Officer John Borghetti said a level playing field could only be achieved if the government would offer the same support it plans to extend to Qantas to Virgin Australia as well.

The PM told 4BC, "I'm just not going to get into those details because I don't think Qantas knows yet what it wants and these are very early days for this."

Mr Abbott's plan would complement the proposal last week by Treasurer Joe Hockey for the government to lift the 49 per cent cap on foreign ownership of Qantas by amending the law to allow the air carrier to secure more foreign investors.

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He added, "Obviously as citizens we'd like to see the flying kangaroo flourish but our principal role as the government is to ensure that we've got a strong and competitive aviation sector so that Australians have access to the kind of aviation services at the right price that they've come to expect."

But Mr Abbott  also pointed out that he isn't sure if Qantas really wants more government funding, stressing that "Where does that stop? Once you start giving it to one business why shouldn't you give it to other businesses."

That is the point raised by Mr Borghetti in his open letter that Australia needs at least two strong airlines to ensure the air passengers are given choices and not just high airfares if one carrier monopolises the country's skies.

"Virgin Australia has succeeded against the odds, in a very difficult marketplace with a major and dominant competitor three times its size that appears intent on flushing it out of the market. If any government support was given to the dominant player, we would expect the same level of support," the Centre for Aviation quoted Mr Borghetti.

Meanwhile, a survey paid for by the Australian International Pilot Association in June 2012 yielded interesting results on what Aussies feel about Qantas. About 52 per cent of the respondents favour some form of government intervention to protect the flag carrier. But 40 per cent of younger Aussies between 18 and 24 years old who are widely travelled  believe that Qantas should be allowed to sink or swim solely on the basis of its performance and not on government aid.

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