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URL: http://www.abc.net.au/lateline/s250625.htm

Broadcast: 22/2/2001
Unfair treatment for Qantas?
So is Qantas really being unfairly treated under the current system? And what do the new players like Virgin and Impulse think of the Flying Kangaroo's threats to destroy one of them? Tony Jones speaks with Gerry McGowan, the head of Impulse Airlines.

Compere: Tony Jones
Reporter: Tony Jones

TONY JONES: Gerry McGowan, Qantas today said it's cutting 1,500 jobs basically because it's been subjected to unfair competitive pressures from small airlines like yours.

Is that right?

GERRY McGOWAN, IMPULSE CHIEF EXECUTIVE: We're not the gorillas in this.

I don't think it's fair to say that we're unfairly competing with Qantas.

Surely they're the ones that have the market power and the market dominance.

TONY JONES: They also seem to be making the point that they -- Qantas that is -- have certain restrictions on foreign investment.

It seems that as the national carrier they have up till now had to keep alive certain air routes which are relatively unprofitable like China and Canada.

They look like they're now going to stop doing that in order to compete.

GERRY McGOWAN: I don't believe that is the case.

They are under no obligation to provide services to China and Canada.

If they've been providing them and they're not profitable, more fools are they.

TONY JONES: Would you be happy, though, to see those foreign investment restrictions on Qantas lifted?

GERRY McGOWAN: I would be happy to see them lifted.

But with the lifting of those restrictions comes the cabotage issue.

If Qantas want to be a foreign-owned carrier and they're at 49.9 per cent or so at the moment, once they move over 50 per cent then I don't believe they should be allowed to carry domestic passengers on their international services.

They can't have it both ways.

They can't strengthen their balance sheet in order to compete aggressively with Australian carriers such as Impulse and at the same time still hold cabotage rights in Australia that other foreign-owned carriers don't.

TONY JONES: But they are saying the gloves are off now and they're actually closing down some of those overseas routes, precisely to bring those jets on to domestic routes to compete more heavily with smaller airlines like yours.

What's the effect of that going to be?

GERRY McGOWAN: They're not talking about competing.

They're talking about murdering a couple of small start-up carriers that have caused them to drop about 26 per cent of their profitability off domestic services.

TONY JONES: You say that this is murder, if you like.

Do they have the capacity to murder you as an airline commercially because they're saying that there will be fewer airlines operating in Australia this time next year.

GERRY McGOWAN: There could well be.

And Qansett would be a good name for them.

It's interesting to see that the only cheap air fares that Qantas and Ansett are aggressive about are on routes that Impulse and Virgin compete on.

TONY JONES: If you say Qantas has decided to go hell for leather as it were to destroy your airline, how are you going to meet them head on when they have so much power?

GERRY McGOWAN: You are quite correct.

They do have a lot of market power.

I thought that's what the laws of this land were all about.

There are anti-competition laws, and it's up to the Government and the ACCC to ensure that we have a level playing field out there.

And to date I believe Qantas has abused that and nothing has occurred from the regulatory authorities as yet.

We can't -- we're not the legislators in this country.

That's a role for the Government.

We are going to compete aggressively.

We're well capitalised.

We think we understand this business.

We understand this market.

We have a lot of support from our customer base.

We've just got to do the best we can.

If Qantas want to get very aggressive and they want to dump capacity and they want to discount fares to unsustainable levels, then certainly he who has the deepest pocket also win.

But that's going to be bad for this country.

TONY JONES: Thanks for joining us tonight on Lateline.

GERRY McGOWAN: Thank you.

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