Men Who Killed Qantas - Matthew Benns [40]
By December it was clear the Pilots’ Federation was a spent force. It was no longer recognised by the airlines and did not represent the many pilots who were now flying domestic routes. By Christmas the federation was broken and domestic air services were slowly returning to normal. For Qantas crew, pilots and staff enjoying the last Christmas of the decade, the dispute was the first warning of the next winds of change that were about to come howling through the airline.
QANTAS CAME OUT of the pilots’ strike at the start of the 1990s with a dramatic restructure. It was designed to cope with the sudden drop in demand for its own services, which flowed on from the domestic dispute that had hit Australian Airlines and Ansett so hard. Inadvertently this restructure, particularly with its focus on new routes into Asia, put the Australian airline ahead of its international competitors when the economic slump doused the world economy a couple of years later. It meant the airline was better placed to deal with the first Gulf War and the quadrupling of fuel prices that cost the airline industry $US15.6 billion in the first three years of the decade. But it still carried debt.
The Qantas board had long been begging the government for capitalisation – a cash injection to invigorate the airline – but it was not forthcoming. Without that, the board argued, the only way forward was privatisation and a cash boost from the share-buying public. It also lobbied for an end to the longstanding restrictions that prevented it from operating on domestic routes. Qantas CEO John Ward called for ‘the winds of competition’ to blow through Australian aviation.1
The big change came after Paul Keating took his seat in the prime minister’s office. In February 1992 he radically changed the government’s policy on Qantas in his ground-breaking One Nation statement. ‘Qantas will not be able to compete effectively in international markets unless it is given the same opportunity as its foreign competitors … the restrictions on Qantas operation … forming and cementing an alliance with an Australian domestic carrier will therefore be removed,’ he said, making the New Zealand trans-Tasman operations part of a single market.2 Keating was ending decades of careful segregation of the domestic and international markets. He was also paving the way for an end to government-controlled aviation companies, instead allowing those winds of competition to set the pace. Australia’s skies were up for sale and the race was on to see who would emerge with the rights to fly them.
There was a great deal of jostling over which airlines would team up. The mood was reflected in the questions posed by the Sydney Morning Herald in March 1992:
What bidders want to know is what they will be buying: will Qantas be buying into Australian? Will Australian seek to take a bigger stake in Qantas than is now being seriously considered by the airline? Will Air New Zealand get rights to fly passengers onwards from Australia? Will it be flying domestic routes in Australia? Will Ansett bid into Qantas? Who will buy News Corp’s 50 per cent share in Ansett, and, most importantly, what will the rules be for Australian and Ansett’s access to international routes?3
At one point Ansett and Australian teamed up with their own proposal to take a lucrative slice of Qantas’s international routes. The unlikely alliance was brokered between Ansett’s bosses – TNT’s Peter Abeles and News Corp’s Ken Cowley – Australian Airlines’ chairman Ted Harris and ACTU secretary Bill Kelty. It put the old domestic rivals together and cut out new start-up airline Compass. Ansett followed this up with a proposal that effectively would have given it control of Qantas. That idea never took off. Ultimately it came down to three serious contenders: British Airways wanted to buy a combined Qantas and Australian; Singapore Airlines was interested in a prime stake in Qantas; and Air New Zealand-Brierleys wanted a prime stake in Australian.
Publicly the sale of Australia’s international and domestic airlines dragged on.