SydneyL Australia''s flagship carrier Qantas Airways has warned the Federal Government that it could 'go under' if Abu Dhabi-based Etihad Airways is allowed a double stake in rival carrier Virgin Australia.
According to News 24, Etihad bought a four percent stake in Virgin Australia in early June and is seeking to boost its share to 10 percent. Qantas chief executive Alan Joyce led a delegation in Canberra to coerce the Federal Government and the Opposition against allowing Etihad to buy greater stakes in Virgin.
They argued that the deal would enable foreign-controlled Virgin Airlines to dominate the domestic market with predatory pricing on profitable domestic routes. "Virgin/Etihad will be able to flood the market with capacity until its competition is forced to significantly reduce its own operations or worse," Qantas said.
Shadow Treasurer Joe Hockey has, however, said Qantas would not go under if Etihad expanded, but tough choices need to be made about its future. "I don''t think it''s going to go under if Etihad increases their stakeholding.
Already Air New Zealand and Richard Branson have much larger stakes as foreign investors in Virgin than Etihad," Hockey said. "We have to make a decision about whether Qantas does become a major international airline with a majority ownership overseas," Hockey added.
First Published: Friday, June 22, 2012, 13:40