Australia, it's time to deregulate the skies

It was due to take place on Tuesday afternoon.

But yesterday there was no mention of it in the press. Nothing.

Cabinet members, divided as they were on the policy, seemed to prefer either to kick the agenda item down the road by delaying its discussion to a future cabinet chinwag, or they did canvass the issue but prefer not to remind us voters (via a press release) of just how useless they are in promoting the public interest in the face of strong arm-twisting by pressure groups.

It's the Medicare co-pay fiasco all over again. With the same hapless actors. This time with wings.

The matter that should have been debated was a proposal to allow foreign airlines to ply domestic routes in northern Australia.

Last week Fairfax Media presaged that the proposal will be unceremoniously dumped "due to concerns it will undermine regional carriers, Qantas and Virgin Australia".

This is code for Cabinet members folding like a deck of cards in the face of assiduous lobbying from the airlines, its unions and its foghorns. These protectionists are united in their objective to keep their jobs at the expense of Australians being denied the joy of flying the deregulated skies and benefitting from the lower fares competition will bring.

Trade Minister Andrew Robb, whose hat collection includes "tourism", in an effort to boost economic activity in the "Top End", argued to allow foreign carriers to fly between airports above the Tropic of Capricorn, including Cairns, Darwin, Broome and Port Hedland. Ideally that would soon after extend to flying say Darwin-Melbourne or Cairns-Sydney as well.

But alas Fairfax Media claims he was recently rolled.

And Joe Hockey, the guy keeping the Treasury seat warm for the Minister for Social Security, while initially receptive to the winds of competition, over time turned to jelly on the matter.

This is the same Joe Hockey who last year couldn't sell the Federal Budget; this year had the job of selling the budget privatised (by his boss) to Scott Morisson; spectacularly failed to argue the abundant merits of the Medicare co-pay initiative and on Tuesday in Parliament ridiculed those Australians who are frustrated with their inability to buy a home in Sydney. His poor performance will no doubt cost the government a few points in the forthcoming opinion polls.

Deputy Prime Minister and National Party leader Warren Truss also stood steadfast against introducing competition into the airline industry.

Given their vocal disdain for consumers one can only wonder just who these two mouthpieces represent?

Is Truss really the Member for Wide Bay (Qld) or is he the Member for Qantas (QF)? Nothing new here. Former Federal Transport Minister and National Party leader, John Anderson was voted into the House of Representatives as the Member for Gwydir (NSW) but often behaved as though he was the Member for QF.

And what about young Joe? Member for North Sydney or the Member for Virgin Australia (VA)? Hmmm.

As with any policy change, vested interests like QF and VA (as well as their supporters) are more than entitled to ventilate their views. And they did.

But it's the government's job to stand up for the rest of us and to oppose special interests.

Non-government supporters of current industry players, like former Qantas chief executive Geoff Dixon are also permitted to push their views. And he did, with gusto, recently describing the Robb plan as "a step too far even for northern Australia". …which could "seriously undermine" local airlines.

Unionists (both blue collar and white collar), including the Transport Workers Union and the Australian and International Pilots' Association got into the act, forecasting that the proposal threatens the local aviation industry and jobs.

Virgin Australia chief executive John Borghetti warned on 29 May that the airline would be forced to reconsider flying on marginal routes in northern Australia if the government adopted the plan.

"There is a reason no other country allows this", he added.

The Virgin Australia boss seemed to be sharing speechwriters with Shadow federal transport minister Anthony Albanese when the latter labeled the plans to allow foreign airlines to fly domestic routes in northern Australia as "unilateral economic disarmament" and "we would be the only country in the world to do it".

What unites all of the opponents of competition is a pathological refusal to acknowledge, let alone admit, that what is in their interests is demonstrably not in the interest of the Australia's 23 million people who constitute the flying public. Airline industry types and their megaphones in Parliament trot out all the possible "costs" of deregulating the northern skies but cite none of the "benefits", chief amongst them being lower airfares and better products. This renders their arguments somewhere between misleading and deceptive.

Take Albanese's shriek that if Australia went ahead with opening up our northern skies, "we would be the only country in the world to do it".

What he didn't say speaks volumes. He ignored context.

That is, many countries don't need to open their skies to foreigners to enable competition on domestic routes to thrive and in the process lowering airfares for domestic passengers.

Forget small airports in northern Australia. Let's take a far simpler example. If I want to fly from Kingsford-Smith to Perth, I can fly VA, QF or QF subsidiary (Jetstar).

In effect a choice of two carriers, at a price determined by an oligopoly.

Now, if I lived in Los Angeles and wanted to fly to New York City, I could choose between flying:

• Virgin America
• JetBlue
• United
• Delta
• US Airways
• American
• Alaskan.

(For consistency, I treated low-end carriers identically. In the Australian example I ignored Tigerair and in the American example I ignored Spirit Airlines).

With so many airlines to choose from, consumers in southern California are not denied competition and lower fares by the absence of foreign carriers flying the Lower 48's skies.

But not so in Australia.

The dearth of local competition requires the involvement of foreigner carriers in order to create a competitive market in aviation.

All the doomsayers have a couple of things in common.

They are correct in forecasting possible financial problems for QF and VA if say Air Asia X, Emirates, Etihad, Singapore, Air Niugini or Air New Zealand start carrying passengers from Cairns to Darwin and onto Broome. And perhaps thereafter to Kingsford- Smith or Tullamarine.

But the doomsayers never acknowledge that unnecessarily high airfares Australians - both north and south of the Tropic of Capricorn - currently pay is in effect a tax or a tariff, which sees the many (the flying public) being robbed to enrich the few (QF and VA).

Any student of economics knows that greater competition yields better products and services for consumers at more affordable prices. Think flat screen televisions. Think cars. Heck, think elections!

If foreigners can provide the same service at a cheaper price (than QF and VA) or a better service at the same price, why should Australians be denied the right to board their planes?

Is it the job of northern Australians to underwrite jobs of those who choose to work in the airline industry if such underwriting hits their wallets hard?

But what is most significant when anti-consumer advocates like QF, VA and their entourages crudely wave the flag in an effort to stop competition is not their claim that "Middle Eastern carriers" (this is a pejorative for EH, EK and QR) are competing "unfairly" or are "subsidised", it is their false assumption that Gulf Arab carriers are, like western carriers, motivated by profit.

This may not be so.

Gulf Arab carriers may have other strategic goals that to them are far, far more important than profit. Goals that demand high volumes of traffic passing through the mega airports of Abu Dhabi, Dubai or Doha, and world leading customer service offered by these airlines coupled with highly competitive airfares is, to their way of thinking, the best way to secure this.

Let's suppose that two of the three, Etihad and Qatar are indeed subsidised. In fact, let's go one further and say they operate as not for profit businesses.

Say they lose money flying Australians. For all I know they are damned chipper about that!

Why? Because Etihad and Qatar Airways are cogs in their governments' wheels where the objective may not be to make money, but instead may be to promote their desert sheikhdoms to the world as up-and-coming nation states.

Think Abu Dhabi's Guggenheim Museum.

Think Qatar's success at winning the right to host the FIFA World Cup 2022. For those who missed the news, Qatar is not a football crazed state, but a nation that lobbied hard for the right to host the World Cup merely to showcase to the world what a modernising nation it is fast becoming.

In addition to promoting their kingdoms, both airlines are also in the business of developing infrastructure and generating employment.

Is there anything wrong with an airline being a not for profit businesses? In what textbook does it say that businesses must have a single objective: profit?

Can we really hold it against them that the goal of some airline bosses is to return a different kind of "dividend" to shareholders?

Every government spends money somehow promoting its brand.

Australia contributes to the nation's economic prosperity by spending $250 million through Austrade around the world extolling the virtues of Australia through guiding, supporting and directing Australian businesses. And this results in Australian firms getting business where others may not because their countries do not spend hundreds of millions promoting its brand.

Our military is spending $400 million per annum promoting democracy and the safety of Iraqis by helping Iraqi forces extinguish Da'esh terrorists as quickly as they can.

We are not spending these sums to make money. We are spending it because it promotes our values, our businesses and above all, our brand: Australia.

The Gulf Arab states are doing the same. They are ploughing billions of Dirhams into their tourism related infrastructure including airlines and hotels to promote their sheikdoms. No more, no less.

As is their right.

QF and VA may whinge that EH, EK and QR are competing "unfairly". But who are they to define what is and what is not "fair" when their definition impacts destructively on the wallets of 23 million Australians?