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Thursday, 27 November 1986
Page: 3861


Mr JULL(1.43) —Mr Deputy Speaker, before I commence my comments on this motion, just for the edification of the honourable member for Macarthur (Mr Martin) I will quote two paragraphs concerning the privatisation of Qantas Airways Ltd from the Liberal-National coalition's aviation policy. To assure him that those shares will stay in Australian hands, I advise him that the policy states:

Shares in Qantas will be offered with the aims of giving the widest possible shareholding participation to the Australian public, and of giving employees of the company and any superannuation or like scheme maintained by the company, the opportunity to take up shares on a preferential basis. The Liberal-National Parties will closely consult employees on any question that may affect them in relation to the sale of shares in Qantas.

At the outset, restrictions will be placed on the number of shares that may be held in Qantas by any company, individual or nominee. These restrictions will be kept under review. Foreign nationals and foreign companies will be excluded from holding shares in Qantas, whether directly or indirectly, since their interests and the interests of Qantas as Australia's overseas carrier, the Australian Government's interest in Qantas's overseas operations, and the interests of the Australian travelling public, may conflict.

I think that puts the record absolutely straight. Can I say that it would be true that in terms of the first part of this motion there would be very little disagreement in this House that Qantas and Trans Australia Airlines, now Australian Airlines, have made a very significant contribution to the development of aviation.


Mr DEPUTY SPEAKER —Order. It now being 1.45 p.m., in accordance with standing order 109, as amended for this session, the debate on the motion is interrupted.

Motion (by Mr Duffy) agreed to:

That the time for discussion of notice No. 1 General Business be extended until 2. p.m.


Mr JULL —I do not think there is any disagreement that Qantas and TAA, now Australian Airlines, have made a tremendous contribution to the development of aviation in this country. Indeed, they have done particularly well in a highly regulated world, but that world is changing. Out there it is a deregulated aviation industry that is starting to develop. That is one of the reasons why not only Singapore but also a number of countries around the world are moving towards the privatisation of their international carriers so that they can get out there in the real world, compete and make all that foreign capital of which honourable members have spoken. A few of those airlines are undergoing the process of privatisation at the moment. British Airways is probably the most prominent. It will be going out to shareholding very soon. Singapore is indeed looking at increasing the private ownership of its airline. Malaysian Airline System is going through the same process; Thai International is also. While we talk here about the tremendous contribution that government instrumentalities make let us go back to the favoured countries of most honourable members on the Government benches, the Scandinavian countries, in particular Sweden. It is interesting to note that the national carrier of Sweden, which incidentally is also shared by Denmark and Norway, is now to be further privatised. It has already been privatised to the extent of about 35 per cent ownership, since 1947. That airline has done particularly well. While I would never knock Qantas, it was interesting that the airline of the year last year was not Qantas. It was the Scandinavian Airline System. It has done particularly well under private ownership and private management. But as I said before, times are changing, are getting completely different out there in a deregulated world.

The deregulation of the United States of America's airline industry over the last decade has probably caused most countries around the world to look at their entire operation. Indeed, there is tremendous pressure from the United States to make sure that other countries, with which they deal, undergo some sort of deregulation as well. The effects of deregulation are argued long and hard and there are admittedly two sides to the story. But there is certainly no doubt that what has happened in the United States under deregulation is that more people are being carried and fares have dropped dramatically. There has been a restructuring of the aviation industry but it has been the public, in fact, that has benefited. I took out some figures for today because there has just been an adjustment in the prices of fares in Australia. The current Sydney-Melbourne economy one-way air fare is $317.80. I went to the latest edition of the ABC World Airways Guide. I told myself that I would look not at the discount carriers in the United States, but at the fares of some of the big ones and thus should get a fair comparison of fares. The listed economy fare from Los Angeles to Washington, which is four times the distance from Sydney to Melbourne, is on American Airlines $340, bearing in mind that Sydney-Melbourne fare, for a trip which takes one hour, is $317.80. If one wants to fly by Republic Airlines, which is not a discount operator, the fare is $306. If one wants to fly by Eastern Airlines, which is not a discount operator, the fare is $299 for four times the distance and away we go!

The fact is that under our regulated system in Australia we have one of the highest air fare regimes in the world. In terms of international fares Australians are paying some of the highest air fares in the world. I believe that we have an obligation to the public to make sure that air travel is accessible to everyone. One of the most significant statistics is that only 14 per cent of the public of Australia have ever been in an aircraft. That is almost unbelievable. All the surveys that are done around Australia indicate that the principal reason people are not travel- ling by air is that it is too costly. In the 22 months that I was out of this place I worked with the Queensland Tourist and Travel Corporation in a senior position. One of my responsibilities was to deal with airlines, both domestic and international, to see what could be done to promote tourism to Australia and in particular Queensland. We also looked at the domestic situation. One of the first things that we managed to negotiate was charter air fares between Sydney and the Gold Coast. The fare structure on East-West Airlines, operating four charters each way on a Saturday, was $99 return, $47.50 each way. To that we added a $100 a week holiday package and sold it in the western suburbs of Sydney, to people who could never otherwise afford to fly. We went further than that. Negotiations went on with the hierarchy of TAA about the proposition of putting in charter operations between, say, Melbourne and Cairns. Both domestic carriers go into palpitations when you start talking about charters because they say it is going to interrupt their normal business traffic. The proposition was that perhaps TAA could put on a charter Airbus at midnight on a Saturday night when no businessman flew, fly direct to Cairns and leave there at 3 o'clock on a Sunday morning. It would include a week's holiday package, which people could not get away from, so that we would not interrupt the normal business traffic, so that we would be just promoting pure tourism traffic. The return airfare Melbourne-Cairns on a charter operation would be $200. The point is that, with the restrictions that still apply to Australian Airlines, it is very difficult for it in this regulated area to get out there and make some of these promotional activities relevant-indeed, to try to break the iron-fisted grip that hangs over the airline industry in this country because of the regulations imposed by the Federal Government and the nature of the ownership of that airline. We have to start completely changing our thoughts towards the operations of Australia's domestic and international airlines. We are not going to do that until we can get to a stage where the two domestic airlines can at least operate on an equal footing. If we can privatise TAA and get it into a competitive situation with Ansett the fun can start. The beneficiaries will be the travelling public of Australia. There is no reason why we should be paying these tremendously high air fares.

But exactly the same thing applies in an international sense and I am delighted that the people we speak to in Qantas say that the idea of opening up Qantas to private shareholding is really going to help them. They want the dead hand of the Government lifted from their operations as well. They have problems with the Department and indeed with the Minister. Of course, while we have this over-protective attitude and this highly regulated area, we are going to have some problems. Admittedly, over the last 15 years fares to and from Australia have decreased. They have decreased quite dramatically, but the plain fact is that Australians and people coming to Australia are still paying some of the highest air fares in the world. Only a fortnight ago on the Gold Coast in Queensland the Association of British Travel Agents had 4,000 delegates for the first time attending their annual conference in Australia. They gave Australia a tremendous wrap up. They saw very great possibilities for it as a tourist destination, but for one thing-the high cost of getting here. Mr Smith, the chairman of that particular conference, put forward the proposition that we really should be looking at charter operations.

I was also involved in the negotiation of overseas charter operations into Queensland and, given the complete non-activity of the Department of Aviation, that particular application failed. A very big organisation-I think bigger than Qantas-called Stirling Airways of Denmark, was quite prepared to operate Scandinavia to Cairns charters at a fare of $830 return-$415 one way from Europe to Australia and back again. The cheapest possible fare that one can get from Qantas and the scheduled carriers at the moment is $1,399 for an off season special. The Japanese started to put some charters into north Queensland. Their tour basing fare on a charter basis was about $480. The cheapest possible tour basing fare under the present regime is around $930. So there are tremendous opportunities if we can establish both Qantas and Australian Airlines correctly and start eating into the tremendous income and employment opportunity that is offered by the tourist industry.

It was interesting yesterday that the Minister for Sport, Recreation and Tourism (Mr John Brown), in answer to a question of mine, should have pointed out that last year Japanese tourists who came to this country spent $100m. One of the sad aspects is that it has not been Japan Airlines, the national airline of Japan, that has carried most of the traffic from Japan to Australia. It has not even been Qantas; it has been Cathay Pacific Airways. Cathay Pacific was prepared to go into the Japanese market as a free enterprise airline, and compete for that business and do extremely well. I acknowledge the tremendous work that Qantas has done. I acknowledge that it is generating big revenue from overseas but we are really just scratching the surface. What we have to do is lift the dead hand from Qantas and let it get out there and compete. Qantas often speaks of the frustrations that it has in dealing with government in terms of determining new air rights. I would hope that once we get to the stage where we can take the shackles from Qantas, it will look at a lot of innovation that would be for the benefit of the whole of Australia.

I guess that we have to pay tribute to Sir Freddy Laker, who was the first man who dared to suggest in Australia in 1971 that we should be looking towards a low air fare regime. Qantas at that stage immediately came in with some cheaper excursion fares. Laker came back twice. Both times that he came back Qantas answered him: Firstly by setting up its own charter subsidiary, Qantair, that has never been generated, and later by bringing in some more innovative fares. But it is a great pity that Qantas and the Department of Aviation have virtually got to be pressured by these overseas organisations before we can start looking at becoming competitive on the world scene. We would hope that once Qantas gets out there as a partly privatised organisation with lean, hard management, it too will be looking at areas such as the charter traffic, as was suggested by the head of the Association of British Travel Agents.

There is a big world out there and there is tremendous potential in this country for the development of tourism. We are starting to see that development come through now and I acknowledge what the Government has done in the last few years to get those numbers up, but still we are scratching the surface; still Australia is attracting less than one per cent of the international travel market to Australia. Still we are very much a babe in arms in terms of delivering that traffic here with the tremendous amount of money that tourists can spend.

If Japanese can be brought in by the charter load, never forget that while they are in Australia they are spending $90 per head per day buying Australian goods and using Australian accommodation. When we start bringing in European charter traffic, the biggest spenders of the lot, never forget that the Swiss spend about $90 per head per day; the West Germans spend $136 per head per day while they are in Australia. The major thing that is discouraging people from coming here at the moment is not the tyranny of distance, it is the tyranny of the high air fare. It is the tyranny of the high air fare that will continue to hold back tourism development in Australia until we can get some sense into our regulatory system and until we can get some sense into the physical structure of our international carrier, Qantas. In terms of the development of domestic aviation, until we can get Australian Airlines structured correctly, too, we are never going to reach the full potential of allowing Australians to travel in their own country.