Tuesday, March 4, 2014
A potentially significant development is underway in Australia as Prime Minister Tony Abbott revealed plans to abolish both the 49% cap on foreign investment and 35% cap on ownership by foreign airlines currently in place for Qantas' domestic operations. This would presumably require the company to create a bifurcated corporate structure similar to that employed by Virgin Australia, separating control of the domestic and international operations. Foreign ownership restrictions would remain in place for international operations as is necessary to remain compliant with most bilateral air services agreements. The proposal is likely motivated by Qantas' recent financial struggles amidst increasing competition from the expansion of LCCs both within Australia and throughout the Asisa-Pacific market. As of now, the measure's adoption remains uncertain as it is expected to face opposition in the Australian Senate.