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Abu Dhabi royal family’s unfair influence in Australian skies must be checked

May 24, 2014 Association No Comments Email Email

Revelations that key Virgin Australia shareholder Etihad is being supported by a secret, interest-free loan from Abu Dhabi’s royal family underlines the need for urgent action to level the playing field for Qantas, the Australian and International Pilots Association said today.

Despite repeated claims that it does not enjoy an unfair competitive advantage, today’s revelations on Etihad’s state backing reveal how unbalanced aviation competition is in Australia.

AIPA President Nathan Safe said inaction on correcting the competitive environment in Australia could no longer be delayed.

“We have a situation in this country in which our national carrier, Qantas, is essentially being undermined by Abu Dhabi’s royal family,” Mr Safe said.

“Etihad is a major stakeholder in Virgin Australia with a seat on the board and voting power soon to hit 22.9 per cent. Etihad’s contribution to Virgin’s $350 million equity issue last year was critical to the issue’s success. We now know this contribution was backed by the interest-free generosity of the Abu Dhabi royal family.

“Such an obviously unfair distortion of fair competition would never be allowed in any other sector of the Australian economy – and it should not be allowed to continue in aviation.

“The effect of this distortion is only too real. Hundreds of pilots no longer have viable jobs at Qantas and are being prepared for redundancy. Some 5000 further job losses have been announced by Qantas management. A huge portion of the blame for this can be sheeted home to foreign, state-backed airlines using uncompetitive practices to grind Qantas out of the Australian market.

“The Federal Government cannot sit by and watch our most iconic Australian company be slowly white anted by foreign state-backed  competition. This is not the free market at work. This is a foreign government unfairly interfering with fair competition in Australian skies.”

Mr Safe said he believed a satisfactory compromise between federal government, Qantas management and Qantas employees could be brokered.

“The debate we have had to date about the Qantas Sale Act has been unnecessarily divisive and absolute,” Mr Safe said.

“Both sides could consider agreeing to removing the 25 per cent limit on a single foreign investor, and the 35 per cent cap on foreign airline ownership  – while retaining the cap on total foreign ownership at 49 per cent. This would free Qantas up to seek foreign investment, while still ensuring it remained majority Australian-owned.”

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