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House of Assembly - Fifty-Second Parliament, Second Session (52-2)
2012-07-11 Daily Xml
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AIRLINE COMPETITION

Mr PENGILLY (Finniss) (15:25): I want to make a few comments in relation to the announcement last week of the arrival of Emirates airways and the few words that the Deputy Premier made in the house. I think it is important to put these things into some sort of order. Emirates is a good airline, an excellent airline, and I have no doubt that Australians, particularly those who live in South Australia, will pick up on the fact that Emirates is flying out of here direct to Dubai and other parts.

I follow the aviation industry with a fair bit of interest and can I also bring to the attention of the house, from Australian Aviation this month, some comments made by the editor Gerard Frawley in relation to Qantas. The issue for me is that, if you run off and use all these other airlines, ultimately, you will lose Qantas international. Domestically, Qantas is going okay but, internationally, it is a disaster. Mr Frawley says:

It is the international operations that are faced with the full force of competition from some of the world's best airlines (Cathay, Singapore, Emirates) with cost bases far lower than Qantas's. As Geoffrey Thomas writes in Contrails—

and I will come to that—

whenever an international airliner lands in Australia, it imports that airline's home country's cost base.

So Qantas finds itself in the position of having higher costs and less efficient 'legacy' work, facing competitors that have lower cost bases.

He goes on:

Every time an Emirates A380 with its 500 or so passengers departs Sydney or Melbourne, that is 500 passengers not travelling on Qantas.

I equate that to the 300-odd passengers that can come into Adelaide on Emirates and leave. They are passengers that will not travel on Qantas, either. So we are cutting off our nose to spite our face, in my view. He goes on:

There are plenty of factors that Qantas has little or no control over—fuel prices, international deregulation, Australia's currency and geographic location.

Further on in the magazine, in the item Contrails, Geoffrey Thomas (another well-known aviation writer) writes:

Adding to the complexity is the federal government's desire to have Qantas as a flag carrier supporting Australian jobs while opening the floodgates to competition.

There is no turning back liberalisation but the government and unions must understand what that means.

There are two dynamics that are unshakeable: every time a foreign aircraft lands on Australian soil it imports that country's labour costs, and most passengers today will change airlines for $10 as safety is no longer a major concern for 75 per cent of travellers.

If a foreign-owned company such as General Motors qualifies for $275 million in assistance to keep open the Holden plant—

in South Australia, I might add—

then 51 per cent Australian-owned Qantas certainly ticks the box for federal aid or at least a more level playing field.

We desperately need to have a national flag carrier like Qantas. In the past, there have been management issues. Alan Joyce has been castigated over some of his actions, but it is his job to get Qantas running properly, both domestically and internationally.

I, for one, have had disagreements with Qantas on various issues but, if we are going to sit here and welcome other airlines into Adelaide and international carriers such as Emirates, Air New Zealand, Malaysia Airlines, and others, we need to think about the costs they operate under and the costs that Qantas operates under and the pressure it is under. I think it will be a very, very sad day if we lose Qantas international, and we could. Remember that it is the airline that has never had a fatality in all its years of operation.

An honourable member interjecting:

Mr PENGILLY: That's correct. Rain Man.

An honourable member interjecting:

Mr PENGILLY: Yes, it is an old movie, but it is still the same—its record remains intact. I acknowledge that people will fall over in the rush to fly with Emirates when it comes to Adelaide, and I do not wish it any harm, but I do sincerely hope that Qantas is supported. It only operates, I think, three international flights into Adelaide (I will stand corrected, if necessary, on that). It is in dreadful trouble. It has some aircraft that it should not have bought, and it should have bought others. It is interesting that Emirates is operating the extended range Boeing 777 into Adelaide. They are magnificent aircraft, and I believe that Qantas would have been better off had they used that aircraft many years ago.

Time expired.

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