Smoke Signal: Qantas and free markets – the TBS perpspective

A writer takes the “free market” view as Qantas announces it will cut 5000 jobs as part of measures to cut costs by two billion dollars.

Today Qantas announced its plans to slash 5000 jobs after posting a $252 million underlying loss for the first half of this financial year.

In addition to the cuts, the airline will implement wage freezes, fleet restructuring, route changes and other internal reorganisation measures in an attempt to save $2 billion in costs over three years.

Qantas CEO Alan Joyce will also take a 36 per cent salary cut.

Labor has urged the Coalition to provide the airline with an immediate debt guarantee, but Tony Abbott today took a firm approach in Question Time, alluding to the political complications associated with any form of government backing.

“The difficulty is this. What we do for one business, in fairness, we have to make available for all business,” Abbott said.

Two months ago, Joyce himself wrote in The Australian “Qantas is not Holden… Qantas has performed strongly with no taxpayer subsidies and no tax concessions – nor are we asking for any now.”

At the time, Joyce was urging the repeal of the Qantas Sale Act. The airline was not asking for a handout – it wanted to enjoy the same fair and level playing field as its competitors.

While short-term debt facilities may still be on the cards, the government is now backing calls to lift uncompetitive clauses of the Act that restrict foreign ownership among other things.

Although Qantas has undoubtedly suffered from poor management, offering the airline a taxpayer-funded debt guarantee would fly in the face of the government’s approach to ending the age of entitlement. Most importantly, it would do nothing to guarantee improved performance by the airline.

Removing the Qantas Sale Act is a positive step towards removing red tape and creating a freer and fairer market. While Labor and the Greens have predictably decried the potential loss of Australian jobs, we must accept that industries and companies must adapt to change – including national carriers.

Ultimately, the future of Qantas should be in the hands of the company, not the government via the Australian taxpayer.

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