Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

There has been a lot said this week about the Qantas dispute but, beyond the tactical question of which industrial relations processes should have been used, there is a broader question: why has this government effectively abandoned the economic reform process which in the aviation sector as in so many other sectors has delivered huge benefits to consumers? In effect we have a government standing idly by while emboldened unions seek to dictate the way that Qantas should manage its business.

Let's take a historical perspective here. For many years there was a government-mandated duopoly in aviation: TAA and Ansett were the only companies permitted to operate. One was government owned; one was privately owned. This arrangement was pretty cosy for the airlines inside the club but left routine air travel unaffordable for the majority of Australians.

Quite correctly, in 1990, the Hawke government kicked off the deregulation of the airline sector and abolished the two-airline policy. The sector was opened up to new entrants, and there have been a series of them. Some have survived and some have not. They have included Compass Mk I, Compass Mk II, Virgin and Tiger. Airfares have dropped dramatically. Rather than being a luxury, for the great majority of Australians air travel can now be a routine part of daily life. The result of this deregulation process has been much more choice for consumers and much lower fares. Consumers are better off. Many more people fly and there are many more trips each year. In 1991-92, approximately 18 million passenger embarkations occurred. In 2010-11, approximately 48 million occurred, an enormous increase in less than 20 years.

However, deregulation of the aviation sector has made life less comfortable for companies in the industry. That is the nature of competition; it creates pressures which industry participants must respond to. Just over 10 years ago, in September 2001, one of those two traditional duopoly airlines, Ansett, collapsed. It had a high-cost structure, legacy work practices, a high degree of unionisation and an inefficient fleet. Ansett failed to match the more efficient new entrants. While Ansett did a poor job of responding to change, so far Qantas has managed its way through change effectively. But the management team of an airline must be ever vigilant. The airline business is a very tough one. It is highly capital intensive, with aircraft costing tens or even hundreds of millions of dollars each. Key cost inputs like fuel fluctuate sharply and labour is a large cost component.

The Ansett collapse shows what happens when a management team fails to adjust a company's operations to new competitive realities. Anybody who thinks that because Qantas has been around for the best part of 100 years its future is guaranteed is indeed naive. For Qantas to assure its survival, its management must be able to take the necessary actions so it remains a viable and competitive business in a fast changing and ruthlessly competitive sector.

As Qantas CEO, Alan Joyce, pointed out, its TWU staff are paid 12 per cent more than their equivalent at Virgin and its long-haul pilots earn 50 per cent more than their Virgin counterparts. Yet the unions are pressing Qantas to a commitment to 'job security'. No company can provide its employees with greater security than it enjoys itself. A guarantee of job security from a company which was forced into collapse would be nothing more than a meaningless piece of paper.

The current showdown between unions and Qantas is about whether Qantas will be able to maintain a viable operating model given the competitive pressures it is facing. This is the playing out of a public policy direction rightly put in place over 20 years ago. It is a policy direction which serves the interests of the many—airline customers, including millions today who are able to fly when 20 years ago they could not have afforded to, as opposed to the concentrated interests of the few. But it is a policy direction which is now under direct threat from the Gillard Labor government. It was a tragedy when one great Australian airline collapsed after failing to adapt to a more competitive market. It would be a double tragedy if another great Australian airline were prevented from taking the necessary steps to secure its future because, under this government, the union bullies are back in control.