ABC WIDE BAY WITH DAVID DOWSETT
THURSDAY, 10 SEPTEMBER 2020
SUBJECTS: Virgin Australia cutting regional routes; the need for a plan for aviation.
DAVID DOWSETT, HOST: Catherine King is the federal Shadow Minister for Infrastructure, Transport and Regional Development. Catherine King, good morning.
CATHERINE KING, SHADOW MINISTER FOR INFRASTRUCTURE, TRANSPORT AND REGIONAL DEVELOPMENT: Good morning.
DOWSETT: So what are your concerns about the loss of these regional flights?
KING: Well, I guess nobody would be particularly surprised about this occurring. It’s what Virgin, Virgin administrators and Labor have been warning of for some time, that without intervention from the federal government in aviation that the inevitable would be loss of jobs and particularly of regional routes. I think this announcement today by Virgin that they’re going to cease flying into Hervey Bay Airport and a number of other airports regionally around the country is disappointing because we know that we’re going to need to have, once we’re out of COVID, we’re going to need to have more visitors coming into regions, particularly for tourism, to actually ensure that economies are recovering. So, I think what’s happened today is not surprising. It’s incredibly disappointing. We’ve been saying since March that the government needed to try and stop Virgin going into administration in the first place. They decided they wanted a market solution, well, this is the solution in the market is giving and it’s meant the loss of routes in regional Australia.
DOWSETT: Well, the federal government has said from the get go that it would not bail out individual companies. Why should Virgin to be different?
KING: Well, I guess you’d have to ask the government why was REX airlines different. They of course were given a $54 million untied grant right at the start of this, no strings attached other than had to prove that they were going to go under without it. We’ve now seen REX come and say that it’s going to purchase some of Virgin’s aircraft and it’s going to fly some additional routes. So you’d have to ask the government why it didn’t stick to its own policy. I’d have to say it did bail out REX and it did take that decision to do that, yet it refused to bail out Virgin. I think they were asking for a hundred million dollars just before it went into administrations and the government refused to do that. So, I think that’s part of the problem is that there’s been complete inconsistency when it comes from the government with aviation, they have been picking winners, they have been playing favourites and they haven’t had a plan for aviation overall. What that has meant is that we are seeing job losses, significant ones both at Virgin and at Qantas, and what we’ve seen is no sort of real plan from the government to say this is the sort of aviation sector we want into the future. We do want two strong competitive players, and these are the things we need to do to try and help ensure that. Early on in this case, obviously before Virgin went into administration, one of the things that Labor was saying is that we could perhaps look at taking an equity stake in the airline as a government entity that you could sell down later when the airline recovered, and that that would ensure the guarantee of some regional routes in particular and hopefully keep jobs in the meantime. Obviously the government decided not to do that. It decided that it would have a market solution, well the market’s now told it this is the solution and regional communities are yet again missing out.
DOWSETT: The government has extended JobKeeper and committed $750 million relief for the airline industry. Why isn’t that enough?
KING: Well there is a bit of smoke and mirrors here. So what the government’s done, of course, it has introduced a wage subsidy in the form of JobKeeper, which is being reduced at the end of this month. But it hasn’t extended that to all parts of aviation. So for example, Dnata workers that provide a lot of the ground crew and catering support became ineligible for JobKeeper. So there are thousands of those workers who basically have not been able to access a wage subsidy or keep that connection with your employer in aviation, so not all aviation workers received JobKeeper. The other thing the government does with the $700 million, it in essence is basically to pay CASA, the regulator, and AirServices Australia, it doesn’t go to the airlines and it certainly doesn’t go to the airports at all. It’s basically to subsidise the services that are needed to keep planes in the air, that are government services. So it’s paid basically itself with that money. That money hasn’t come directly to the airlines.
DOWSETT: So if Virgin gets a bailout, Qantas has already said it would expect a payout to balance the playing field. Isn’t there a risk there that the government would essentially end up in a funding arms race that could cost taxpayers billions to fund a badly managed airline?
KING: Well, I think the first thing is that that horse has bolted to some extent, the government, you know, took the decision not to do that. Our view was very firmly that Virgin didn’t need to go into administration, it had had problems in the past, it had a new management team who were doing some really good work to try and get costs out of the business, but also making sure they could keep regional routes and jobs growing here in Australia. So the government’s decided not to do that. We’re now in a position where we have a market solution which is what the government wanted and now regional routes affected and jobs right the way across the market affected. What we do need is a plan for aviation going forward. We do know that we’re going to need these workers, communities like Hervey Bay are going to need these routes reopened and competition on those routes so that they’re not paying exorbitant amounts of money, people are not paying exorbitant amounts of money to get there, and we are going to need to have that balance across aviation. We had an aviation white paper when Labor was last in government which did say very clearly that the structure of the aviation sector with two strong competitive players, with smaller players underpinning them, was incredibly important for competition in this marketplace. Unfortunately, all of that now has gone and the government’s got to explain what does it think aviation should be looking forward and how does it think it’s going to support it going forward. And so far, we’ve heard complete silence from the government.
DOWSETT: So what will you do to encourage more flights into regions like Hervey Bay?
KING: We will be again encouraging the government to actually sit down with the aviation industry and develop a plan for how it wants aviation to look into the future and how it wants aviation to assist and drive post-COVID recovery. Again, so far, it’s failed to do that. But we’re going to keep the call out to actually develop an aviation plan, and to try to increase services, particularly as we come out of COVID to make sure that we are able to ensure that communities like Hervey Bay, but all the other communities that are affected as a result of this today, they are able to get their flights back in. It really is going to take government intervention to put an aviation plan in place to work with the sector, not just the airlines, but also the airports and all of those industries that support them to see how we can get out of this.
DOWSETT: Catherine King, thanks very much.
KING: Really good to talk to you today.