The shadow transport minister, Bridget McKenzie, was forced to clarify the Coalition does not support breaking up Qantas just hours after floating the possibility of forced divestiture powers in the aviation sector.
McKenzie warned the competition watchdog’s review of the aviation sector “will be a failure if it does not address the role of divestiture” in an opinion piece in the Australian Financial Review on Monday.
The Nationals leader, David Littleproud, told Sky News divestiture in aviation is “not Coalition policy yet” and the idea had not gone to shadow cabinet because “it was an op-ed about a review that the government has put out”.
He clarified McKenzie had only proposed it as an option “to be looked at” by the Australian Competition and Consumer Commission.
“I think everyone’s taken a step ahead of exactly what Bridget McKenzie said,” he said, in reference to the piece headlined “Is it time to force Qantas to break up with Jetstar?”.
In October, a Senate inquiry recommended a review of anticompetitive behaviour in the aviation sector including the examination of divestiture power “to remedy any misuse of market power”.
At a doorstop in Canberra, McKenzie said divestiture is “one of the various tools that the treasurer needs to look at” but clarified it was not Coalition policy.
“I absolutely have to clarify that … Because it’s clear that the Labor government is seeking to misrepresent my position and the Coalition’s position.”
Asked if the Nationals were at odds over the proposal, McKenzie replied: “Not at all. We are very, very keen. The Coalition is absolutely behind the Australian travelling public.”
“In my opinion in the AFR, that I hope you have all read, I explicitly rule out needing to break up Jetstar and Qantas; what I do call for, and what I’ve been consistently calling for, and what the Coalition has been consistently calling for, is lower air fares to the Australian travelling public.”
Mckenzie was quizzed about the op-ed piece again on the ABC’s 7.30 program last night and she repeated her view that divestiture was “one of the tools” available to the government.
In 2023 the Nationals proposed powers to break up major supermarkets but the policy took over a year to develop.
Nationals and Liberals alike were surprised by McKenzie’s op-ed on Monday, with the latter urging her to clarify the Coalition’s position on divestiture in the aviation sector.
In question time the transport minister, Catherine King, said McKenzie had woken up with a “big idea”, which she said would see the budget brand “go the way of Tiger Air”, a brand owned first by Singapore Airlines, then Virgin and shut down in 2020.
“You would think any serious political party would have thought deeply about such a significant policy,” King said.
“But this thought bubble didn’t last the light of day. While Australians were still having breakfast the member for New England [Barnaby Joyce] and Senator [Jane] Hume refused to back it in, quite rightly, and just after breakfast the leader of the Nationals, quite rightly, killed it dead for ever.”
The divestiture threat comes after a prolonged period of public discontent with Qantas, climaxing with its recent acknowledgment it misled customers by selling tickets for thousands of flights it had already cancelled.
It has nonetheless emerged from the turbulent period with fewer competitors, after the recent collapse of Bonza and axing of the inter-capital city network by Rex.
The former watchdog Allan Fels said on Monday divestiture powers should be incorporated into competition law to be wielded by the courts when there are significant breaches of market power.
“Whether it should apply to Qantas or others would be up to the courts, but an actual serious breach of the law would need to be proven, and then a court would have to conclude that divestiture would be the best remedy, rather than a fine,” Fels told Guardian Australia.
Angel Zhong, a finance researcher and associate professor from RMIT, said Australia was known internationally for having several industries with high market concentration, including the airline sector.
Zhong said forced divestments would require careful consideration.
“It would require careful regulatory oversight because your desired outcome is that it will improve competition, and you want to make sure that you achieve that without unintended negative consequences,” she said.
“For example, you could [inadvertently] undermine the financial stability of the airlines involved and the employment opportunities of many Australians.”
