Australia’s crony-capitalist regulation, and one airline’s clever end-around
Timothy P. Carney
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Australians, like the residents of many wealthy countries, are itching to travel overseas more. International air traffic worldwide is growing by about 70% per year.
As a result of this massive appetite to fly internationally, Australia’s national air carrier Qantas can’t keep up with demand. The $2.48 billion net profit in the last year is a record.
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Wherever you see very high profits, you should always suspect that crony capitalism is at play, that the government is tilting the playing field in one company’s direction and using regulation to keep out competition. That’s especially obvious in the case of Qantas and Australia, where disruptions and cancellations have become the norm.
Sure enough, the Labour government in Australia is deliberately juicing Qantas’s profits, driving up prices for customers, and perpetuating the bottlenecks at its airports by curtailing competition from foreign airlines.
Qatar Airways, based in the small but wealthy Mideast country, wants to operate more flights into and out of Australia. This would help not only beleaguered would-be Australian fliers but also Australia’s tourism industry. Some estimate that more than half a billion dollars of economic activity would come from allowing more Qatar Airways flights.
But Australia’s Transport Minister Catherine King says it’s not in the “national interest” to allow more flights. This is obviously about protecting Qantas from competition.
We only sign up to agreements that benefit our national interest, in all of its broad complexity, and that includes ensuring that we have an aviation sector, through the recovery, that employs Australian workers. The government has determined that agreeing to the Qatar Civil Aviation Authority request for additional services is not in our national interest, and we will always consider the need to ensure that there are long-term, well-paid, secure jobs by Australians in the aviation sector when we are making these decisions.
Such nationalistic protectionist cronyism rarely actually serves the stated goals.
Are the Labour Party politicians really protecting Australian workers or just their corporate buddies? Recall that Qantas is experiencing the highest profits it has ever had, and it is not expanding the number of flights or the number of airplanes it owns.
Also, recall that the tourism industry — hotels, restaurants, etc. — would benefit from more flights.
Finally, look at what Qatar Airways is doing to evade these regulations: flying empty planes from Melbourne to Adelaide.
You see, Australia’s government allows Qatar to fly only 28 weekly flights into Australia’s major airports. But if the flight route terminates at a second-tier airport, it’s not counted toward that 28-per-week cap. Adelaide is a minor airport that is less than 90 minutes flying time from Melbourne, which is Australia’s second-busiest airport.
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So Qatar has multiples route from Doha to Adelaide, thus being exempt from the cronyist cap. One of those is direct Doha-to-Adelaide, and the other one has a layover in Melbourne. That layover happens to be more than 6 hours and overnight, something almost nobody would do. The fully expected result is a “ghost flight”: nearly empty planes flying the 90 minutes from Melbourne to Adelaide.
This is a waste. It is a waste of jet fuel, a waste of money, a waste of airport slots. During a time of labor shortages, it’s a waste of labor. But that’s what cronyist regulations do: They create waste, in order to benefit the politically connected.