The solution to airline crisis

Issue 

Editorial

The solution to airline crisis

The February 27 collapse of the Tesna bid from millionaires Lindsay Fox and Solomon Lew for Ansett will almost certainly mark the final end of that airline. As a result, Australians can look forward to fare rises, worse service and a loss in frequent flyer benefits.

Those who will suffer the most, however, will be workers in the aviation industry.

Three thousand ex-Ansett workers will be signing on for unemployment benefits at Centrelink in the next few months. Others queuing up as a result of the collapse will include former workers at Ansett terminals, those working for the now-defunct catering and cleaning companies and employees of tour groups.

Qantas management has already announced its intention to use the final collapse of Ansett to drive the wages and conditions of its workers down to a “competitive level”. Virgin Blue already spends 40% less per employee than Qantas — because of its low pay, poor conditions and minimal training.

Qantas has been involved in a pitched battle with its maintenance workers since it announced a proposed wage freeze in October. Despite attempted management injunctions, workers have maintained overtime bans for three months, arguing for a 6% wage claim.

In the same month as the wage freeze was announced, CEO Geoff Dixon described Qantas as “the healthiest airline in the world”.

The collapse of the Tesna bid took few economic analysts by surprise. According to the February 28 Canberra Times, at an aviation press conference in early February, nobody rated the bid's chances of getting Ansett flying as more than 4 out of 10. No bank would finance the deal (although Fox and Lew are certainly rich enough to do it themselves), and Virgin Blue owner Richard Branson claims his accountants found a $100 million black hole in the business plan.

Many suspect that the Tesna bid was an elaborately disguised attempt to buy the lucrative leases on key airline terminals. The trigger for the bid being dropped was the decision by Sydney Airport to refuse to only offer the terminal leases for as long as Ansett Mark II was functioning.

The terminal buildings are the most valuable assets of the defunct company. As the privatisation of Sydney Airport Corporation proceeds, a feeding frenzy is likely to ensue as private operators bid to get control of the terminals.

Domestic air traffic is notoriously unprofitable in Australia. At the time of its collapse, Ansett was losing $1.3 million a day. Since then, its losses have averaged nearly half a million a day. Fox and Lew proposed to tackle this problem by asking the federal government for an extensive tax break, and subsidy scheme. Qantas already benefits from significant write-offs. It is unclear whether Fox and Lew were asking for better, or equal, treatment.

Since the first collapse of Ansett, regional airlines Hazelton, Kendell and SkyWest have limped along with heavy subsidy from state governments, desperate not to isolate regional centres.

But public subsidies for any airline to operate at profit is madness. It is tantamount to Australian workers handing over money to fill the pockets of multi-millionaires in the hope of getting to pay for air travel.

This has been the end result of deregulation.

There is a better way. Air transport, like rail transport, should be run to meet the needs of the population — not to make corporate profits. This can only happen if Qantas is nationalised, and the assets of Ansett added into one, publicly controlled and run company. Only then can we ensure reasonable servicing of regional areas, high safety standards and secure employment for airline workers.

From Green Left Weekly, March 6, 2002.
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