The Federal Government has made the correct decision not to bail out Ansett, but rather let it fall into receivership. The situation is difficult for the 16,500 staff, but that should be a temporary affair for most of them. As one staff member said, Ansett is a great airline, but it has been let down by bad management. It means that a buyer is likely to be found for the airline’s aircraft, on-ground infra-structure, rights of access to airports and what remains of its goodwill. If that happens, it is likely that shareholders will lose a considerable amount of money. But there is always an element of risk in the purchase of shares. The risks range from poor dividends because of poor profits or outright loss of capital because the venture fails.
In the case of Ansett, it is likely that that the administrators will be able to sell the airline as a going concern and save many of the jobs. The return to shareholders will be small.
The Government’s duty is not to pick winners, or in this case pick which losers it will bail out. Rather its job is to set reasonable regulations for safety, administer laws to prevent anti-competitive conduct and ensure employee rights are protected.
In the case of Ansett, the airline industry generally and indeed, the whole of industry, the Government has not done well on all these fronts. Air-safety regulation in Australia has been an issue of hot contention. Perhaps Australia has been lucky that the safety culture of the major airlines has averted catastrophe despite the government’s safety regime rather than because of it. On competition policy, the Government had for too long allowed the two-airline policy to be the cosy framework within which inefficiency and bad practice could grow. While Ansett was under the control of Sir Peter Abeles and Rupert Murdoch, there is little doubt it got favourable treatment from the Government as far as the regulatory regime was concerned.
As to employee rights, it looks as if the regulatory regime in Australia is going to fail again. When will government and industry get it through their thick skulls that when employees earn annual, sick and long-service leave it is their money and should be held in trust or otherwise taken out of reach, just like the tax instalments and superannuation contributions that are taken from employees’ wages each week? The evidence of dozens of corporate collapses shows that corporations cannot be trusted to use employee entitlements as part of everyday trading funds.
Ansett has suffered from poor management. It has not upgraded its fleet fast enough, and when it has upgraded it has not bought aircraft best suited to the routes it serviced nor best suited to most efficient maintenance operations.
Things were made worse after the sale to Air New Zealand which clearly bit off more than it could chew. Air New Zealand hardly had the capital to save itself, let alone its subsidiary.
There is enough room for more than one airline in Australia, but they must not be mirror airlines as Qantas and Ansett were for so long, providing the same services to the same sort of people between the same destinations at almost exactly the same time.
The surprise is not that the two-airline mirror system is now dead, but that it has lasted so long.
Qantas, too, was wise not to intervene.
The future now is for a buyer or a number of buyers to pick up Ansett’s assets and start to run a different sort of airline or airlines, using Ansett staff.