Pemberton Strong now has to check the letters columns of The Australian
Financial Review each day to see what Geoff Dixon of Mascot says in his
latest missive on airlines and competition.

It’s a sort of update type of briefing each time a Geoffie appears from Mascot
Man.

And today it was no different. Another day, same line “Qantas handcuffed by
ownership cap” thundered the headline on the letter in the AFR, which of
course is the staff journal over at Geoff’s airline.

He’s written before, given a nice comprehensive briefing on all the issues to
the paper, while his chairman, “Dame” Margaret Jackson has made speeches of her
own on the subject, including that very silly one last week that said there
were “too many” airlines in the world. All 210, according to the “Dame”
who must have had a brain snap because she failed to say that Qantas has
started two of them and is in the process of kicking off a third. Here’s
Crikey’s take on that with links to other reports on this continuing campaign – Margaret Jackson’s amazing nonsense.

So what’s in the latest Geoffie in today’s AFR?

Well that darn cap on foreign shareholdings of 49.9% which is contained in the
Qantas Sales Act.

Geoff and the guys and gals at Mascot seem obsessed by it. Unhealthily so in my
opinion. Shouldn’t they be running the airline? The AFR opined in a leader on August 28 that the cap should be lifted and
guess what. Geoff said that was a great idea: “I welcome that
support”.

The letter went downhill from then on into the now familiar rant against
foreign government owned airlines destabilising the aviation market and bent on
world domination.

A sort of “airlines under the bed” argument from Geoff that is, quite frankly,
a bit thin. After all, what has happened in the past 40 years in aviation
except that airlines have come, some have gone, some have been sold by
governments, many started by private interests and governments, and many have
failed.

It’s the normal mix of an industry in which national pride, vanity and
self serving aggrandisement go hand in hand.

Qantas when it was a government-owned business was a basket case. Kept afloat
by the support of Canberra.

And, don’t tell me Geoff that Qantas didn’t get a big, big favour from the
Labor Government 12 years ago when it was allowed to takeover Australian
Airlines (TAA), the government-owned domestic carrier as part of the preparation
for sale and floating.

And since the float, there has been nothing that has stopped Qantas from
growing into perhaps the world’s most profitable full service airline, which
does operate at a disadvantage by being based out of Australia well away from
the major routes. It has done pretty well.

Of course there’s rules for them and rules for us. As Geoff said in the latest
Geoffie he was concerned that the AFR sought to link its approval for the
lifting of the cap to other issues.

And what other issues would they be? Why increasing competition for Qantas on
routes like the Pacific where a cosy duopoly with a weakened United Airlines,
enables Qantas to generate significant profits and keep out possible new
competition from Singapore Airlines and Cathay which both want to fly to the US
from Australia as part of wider deals.

Geoff says Qantas cannot compete properly with Singapore Airlines in a range of
markets beyond Singapore. No mention of the new cheap airline there with
the Singapore Government’s major investment arm (which is the major
shareholder in Singapore) as a significant shareholder in what’s being called
Jetstar Asia.

And you know, foreign airlines are allowed to compete for Australian Government
travel business. Qantas is upset it can’t have a monopoly. No mention that by
starting some sort of competitive process for government travel the community
generally gets more value for its tax dollars.

And, this sort of special pleading makes a mockery of the good work Geoff and
the chaps at Qantas have done in driving down costs and making the airline more
efficient.

The argument about lowering the cost of capital is perhaps one of the great
furphies of business in this country. The board and management set unrealistic
hurdle rates (especially when the low inflation, low interest rate environment
we live is considered) and then won’t invest, or whine when returns do not meet
these inflated yardsticks.

If Geoff and the Qantas board are so concerned about the shareholding cap, let
them detail examples where genuine deals have gone begging, while explaining
the rationale and the benefit to Qantas, its shareholders and present
travellers, and the country as a whole.
Geoff’s latest Geoffie finishes by saying that Qantas is ready to face a fair
and competitive market.

“However, given the long history and current reality of trade distorting
practices in aviation, we don’t see that arriving any time soon. It is for this
reason that we have been pointing to the need for a balanced and carefully
sequenced approach to further liberalisation in this sector”

In other words, according to Qantas, because there are these nasty “trade
distorting practices in aviation” we want some of our own, and where they
exist, we want them retained for as long as possible.

Special interest pleading of the worst kind. No wonder the campaign to remove
the foreign shareholding cap needs to be resisted. This is a company that wants
the best of all words: restrict competition and give it the freedom to do as
many deals as it can without any benefit to shareholders or the country.

I thought this sort of corporate arrogance disappeared in the 80s and 90’s when
tariffs fell and the dollar was floated. Obviously not.