Thursday, December 17, 2009

Australia to Raise Foreign Ownership Limits

The Australian Government is prepared to lift its 25% ceiling on foreign ownership of Qantas to 49%, thus paving the way for the carrier to participate in the slow process of global airline consolidation.  See Qantas Ownership Rules to Change, Reuters, Dec. 16, 2009 (available here).  Australia currently allows 100% foreign ownership for airlines which operate domestic service exclusively (cabotage).

The liberalization of its foreign ownership rule for Qantas is only the first step the Australian Government will need to take.  Under the current bilateral system, most air services agreements include "nationality clauses" which only allow carriers which are owned and substantially controlled by nationals of their flag State to be designated to fly international routes.  Until Australia secures assurances and/or amendments to its existing bilaterals, foreign investment in Qantas could result in the loss of valuable traffic rights.

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