BY ALISON DELLIT
The thing about capitalist competition is that it tends to negate itself. Back in the 1980s, when the Hawke Labor government began de-regulating commercial aviation, we were promised great benefits from increased competition. When this process finally resulted in the advent of two new domestic carriers — Virgin Blue and Impulse — in 2000, airfares fell dramatically and aviation became the great deregulation success story.
But the story turned to tragedy on September 9, with the revelation that Ansett was so deep in debt that its parent company, Air New Zealand, intended to jettison it. Desperate attempts to sell the company — even to its chief competitor — failed.
The impact is still being felt. Ansett employed 17,000 workers, and at least two Ansett contract holders — Traveland and Gate Gourmet — have been placed into voluntary administration. Impulse crashed earlier this year, succumbing to a Qantas buy-out at the cost of hundreds of jobs.
The end result of less than 12 months of "competition" reform is that Qantas is set to enjoy a virtual monopoly on domestic air travel, challenged only by the much-smaller, discount competitor Virgin Blue.
Ansett's problems ran deeper than just an inability to keep up in the cheap airfare war. Safety inspections in December, and then again in April, confirmed what industry advisers have known for some time: when Ansett was sold by News Corporation to Air New Zealand in 1999, its planes were old and poorly maintained. This situation was not changed along with the ownership.
The revelations of poor maintenance forced the company into an expensive propaganda effort to re-establish credibility with passengers, as well as emergency repairs to keep the planes sky-worthy.
Ansett's air services to rural and regional areas contributed to its losses. Thirty percent of non-metropolitan airports were serviced only by Ansett's subsidiaries. With lower passenger numbers to up-front costs than metropolitan flights, these routes are the least profitable end of the spectrum. The Federal Aviation Authority's policy of charging airlines the same amount for access to any airport — Kingsford Smith or Broken Hill — exacerbates this.
The figures released on September 12 showed that, in the 2000-2001 financial year, Ansett recorded a before-tax loss of $165.4 million. By September 9, it was losing $1.3 million a day.
According to former civil aviation safety boss Dick Smith, Ansett was renowned for its management perks. Despite being well-aware of the situation, Air New Zealand promised chief executive officer Gary Toomey a substantial bonus at the end of the financial year. On August 24, while Ansett workers and the public were being assured all was well, Toomey resigned from the board of Ansett Australia Holdings, Ansett Australia, Bodas, Skywest Airlines, Kendell Airlines, Hazelton Airlines, Traveland and Jetset Tours. Air New Zealand is adamant that the company will not reduce the bonus.
Despite optimistic noises from transport minister John Anderson and all the main Fairfax and Murdoch columnists, neither Singapore Airlines nor Qantas were interested in purchasing Ansett.
This would have involved taking responsibility for paying debts, sacking workers to make the airline "profitable", taking the political flak for closing regional routes or paying to keep them open and ploughing cash into new and better maintained aircraft.
Instead Singapore Airlines and Qantas have both chosen to hang tight and wait for the inevitable dirt-cheap asset sale as the company is wound up. Ansett's assets are considerable — flight gates, fully trained and experienced staff, the better aeroplanes.
Singapore Airlines may move to break into the domestic market when the assets go on sale, starting its own Australian domestic carrier. More likely, Qantas will secure total market dominance by buying up all the key gates and hiring just 6000 new staff.
This scenario is very ugly for both passengers and staff. When Qantas took over Impulse, it took the opportunity to employ some flight attendants at the lower pay rates that they were paid at Impulse.
Currently embroiled in a pay dispute nation-wide, it is likely that Qantas will seek to use the sudden influx of skilled, experienced and desperate workers onto the market to drive down wages. It will discard thousands of specially trained workers with no alternative employers.
It will certainly mean the end of affordable air travel. With just one competitor — which is currently operating out of sheds and has seats designed solely for midgets and amputees — Qantas will be able to push prices 30-50% higher. With no incentive to woo customer loyalty, its frequent flier program is likely to become less lucrative.
Regional routes may suffer the most. It is possible that services to many areas will cease. Many will become much less regular (and anyone who's missed the Friday night special out of Port Augusta will know the pain in that) and/or will increase dramatically in price.
This is the end result of capitalist competition — rural areas screwed, consumers pay more, workers paid less and you don't even want to think about safety guarantees.
The government cannot allow this to happen. That is why Ansett, with all its assets, must be nationalised and run in the public interest. The management must be sacked, and all perks, dividends and corporate sponsorship deals must end.
The books must be opened to workers' examination. Debts to suppliers should be paid, in order to maintain the viability of these companies. Debts to big capitalists should be assessed by need and potential impact to jobs. Just as we demand city-wide public transport, we must demand nation-wide air-based public transport.
This should not simply be the nationalisation of debt. The ongoing viability of a government-run airline will require the re-nationalisation of Qantas.
Far from being inefficient, a democratically controlled government monopoly is the only way to ensure a safe, efficient service that is accessible to all those who need it. The alternative, a privately-owned, profit-hungry monopoly, just doesn't bear thinking about.