What is behind the Qantas-Virgin row?

Photo: Greg Wood (AFP)

Qantas and Virgin Airlines Australia are currently engaged in a public battle over who is better off under the existing regulations that govern airlines in Australia, with the  two pieces of legislation and seem to be at the center of the controversy being the Qantas Sale Act and the Air Navigation Act.

The Qantas Sale Act was enacted in 1992 to ensure Virgin retained majority Australian ownership after privatization, with foreign ownership in the flying kangaroo is capped at 49 percent and single foreign investors cannot own more than 25 percent of the company. The Air Navigation act demands that Virgin maintain Australian ownership in order to continue to have access to routes in and out of the country.

Qantas feels that because Virgin has partial ownership from three different other foreign airlines, Virgin is being intentionally ran at a loss in order to drive them out of business. Qantas pointed out other ways the Federal Government could assist it, including a Commonwealth guarantee on its debt.

Virgin CEO John Borghetti says any assistance should be extended to them, and is calling for an end to the Qantas Sale Act saying the airline has no problem competing on a level playing field with Qantas.

Virgin split its domestic and international operations in 2012 in order to comply to government mandate, allowing all international affairs to be done primarily by Australian ownership, while domestic affairs would be foreign owned.

Source: http://www.abc.net.au/news/2013-12-08/qantas-versus-virgin/5142932