In full-page Australian newspaper ads yesterday, British tycoon Richard Branson urged the business community to “think twice” about investing in Australia in response to possible Australian government help for national carrier Qantas.
Branson, whose Virgin Australia carrier is in direct competition with Qantas, criticized the conservative Australian government in an open letter to the Australian public published in newspapers.
Qantas has been lobbying the Australian government to ease limits on foreign investment or provide state intervention to help shore up its bottom line as it battles record fuel costs and fierce competition from subsidized rivals.
The Australian carrier claims a 49 percent foreign ownership cap under the terms of its privatization in 1995 leaves it at an unfair disadvantage to Virgin, which is majority-owned by state-backed Singapore Airlines, Air New Zealand and Etihad Airways.
Australian Treasurer Joe Hockey last week described the limit as a “ball and chain around the leg” of Qantas, which he said was now confronting a “2,000 pound [907kg] gorilla” — widely interpreted as a reference to Virgin.
Branson responded, saying the description “would be flattering if it was not so laughable” and then asking what that logic made Qantas, “which is four times our size.”
“Should the Australian taxpayer be forced by the Australian Government to prop up the Qantas Group as Federal Treasurer Joe Hockey is suggesting, businesspeople worldwide should think twice about investing in Australia for fear of such intervention in their sectors,” Branson said in the ad.
“Qantas has gone cap in hand to the Government. If the Government fills their hat it will severely damage competition in Australia,” the ad said.
In December last year, Qantas said it was facing some of its toughest challenges ever as it flagged a half-year loss of up to A$300 million (US$271 million) and the eradication of 1,000 jobs. The airline is expected to report its interim first-half results later this month.
Branson said Qantas already received most Australian government travel spending and “should not be granted further special privileges over all its competitors,” saying that until Virgin arrived on the scene in 2000 Qantas “enjoyed a virtual monopoly in most parts of the Australian market.”
The Virgin founder said he did not care what Australia’s government did with the Qantas foreign ownership cap.
“What is most important is that the government doesn’t provide financial assistance to Qantas, enabling them to reinstate their monopoly,” he said.
“It is not right for the industry and it will not benefit the Australian traveling public or the economy,” he said.
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