Qantas (QF, Sydney Kingsford Smith) has expressed its strong opposition to the opening up of cabotage in the Australian domestic aviation market. In a statement to a government committee looking into the proposal, Qantas spokesman Andrew Parker said that the policy would be a disaster.
The Australian government is currently holding a senate committee enquiry – the Red Tape Committee – into the effects of red tape (or burdensome regulations) on Australian businesses. One of the specific topics falling into its scope is cabotage. The committee's mandate does not specify whether cabotage refers to maritime or aviation transport, and submissions have been received on both.
In its submission, Qantas says that Australia already has a very liberal and competitive aviation market which allows foreign ownership of domestic airlines, and unrestricted access for foreign carriers at non-gateway destinations, such as Cairns, Darwin, Townsville, Adelaide International, Broome and Hobart International.
"A cabotage policy would have serious domestic and international impacts, materially erode the asset profiles of Australia's airlines, negatively impact future investments and be viewed as a risk by current and future investors," the statement says.
It also says that the current system is not overly burdensome. "We see no evidence that current market dynamics are a constraint on either price or capacity."
The Department of Infrastructure and Regional Development (DIRD) agrees, saying that the current "regulatory process associated with aviation cabotage is not considered burdensome for airlines."
Both submissions point out that foreign carriers do not come under Australian regulatory oversight, which may compromise Australia's domestic aviation safety.
A suggestion to trial cabotage in northern Australia has been dismissed by the DIRD. "Replacing a service that an Australian airline operates on a marginal basis with a service that a foreign airline can operate more profitably is unlikely to increase competition, lower fares or benefit consumers."
Qantas also rejects any 'lite' version of cabotage, saying that the process of winding back aviation policy would destabilise the market.
Finally, the submission from Qantas says granting foreign carriers carte blanche on Australia's air routes would remove a valuable bargaining chip from future air service negotiations.
"Cabotage would undermine and disadvantage Australia's position in future air services negotiations. These rights, the most valuable in aviation, would be gifted to over 100 countries without seeking reciprocal opportunities for Australian airlines," the statement says. "Put simply, this would be a disastrous trade negotiation strategy and deny Australian airlines a clear measure of certainty around which they can base long-term investment planning."
