Pre-pandemic, Melbourne to Sydney was the second-busiest domestic air route in the world, making the border closure a hammer blow to the already teetering Australian aviation industry. It's therefore time for Scott Morrison to take his aviation envoy, Nicholas Moore, off the bench and onto the field to negotiate a government equity stake in Virgin and Qantas.
While it may seem odd for a trade unionist like myself to welcome a former Macquarie Bank chief executive into aviation, Mr Moore is in fact eminently qualified to negotiate a hard bargain on behalf of taxpayers and ensure the public gets a return for a bailout.
Indeed, a roundtable approach involving representatives of government, shareholders, workers and consumers is the only approach that will bring confidence and stability to our industry.
Just consider how the best-laid plans have recently been scuppered. Qantas thought it would resume 40 per cent of its normal flying schedule by the end of July. That's now off the table. And hopes a revamped Virgin can be up and running under new owners next month are also in jeopardy.
Since the pandemic hit and shut aviation down, throwing Virgin into administration and forcing Qantas to run to the markets every few weeks for cash, the federal government has had a simple answer to the problem. "We need to get planes flying around Australia," the Prime Minister told Parliament last month. He has insisted on a "market-based solution".
But wishful thinking definitely won't cut it now the border's shut. It's time for direct government intervention.
It is unlikely the NSW-Victoria closure will be the last restriction imposed on domestic travel in Australia before a vaccine for COVID-19 is found.
And while the government has taken action to prop up aviation, it has been reactive and piecemeal.
It has already spent hundreds of millions propping up the wages of stood-down workers at Qantas, Virgin and several aviation companies. It is funding some key domestic and regional routes to keep essential travel open. It continues to allow refunds and fee waivers for aviation fuel excise and charges, and has given millions to Rex, Qantas and Virgin as part of financial support for regional airlines.
But short-term cash injections and rebates don't make long-term sense. Taxpayers effectively socialise the losses, and the industry lacks long-term certainty.
What we really need is the government to step in and properly underpin the industry until life returns to some semblance of normality. And that means taking ownership stakes in each airline.
The public understands and agrees with this approach. An opinion poll in March showed a strong majority, 62 per cent, want the government to take a stake in private companies which require bailouts. And a full 50 per cent agree Qantas should be nationalised if the situation gets worse. Only 20 per cent oppose such a move.
Trying to prop up the aviation industry in a piecemeal fashion is wasteful and out of step with what other countries around the world are doing.
Germany is pumping almost $15 billion in to save Lufthansa, with the government taking a 20 per cent stake in the airline and two seats on the supervisory board. France will spend $24 billion on Airbus and Air France, companies it already owns stakes in. The Hong Kong government has devised a $7 billion rescue plan for Cathay Pacific, which includes it taking a stake.
The aviation business is inherently precarious and requires stabilisation. Why should shareholders enjoy bumper profits but enjoy public bailouts when confronted by terrorism, war, volcanoes, fuel price rises or viruses? Almost every private airline ever launched has gone bankrupt. A public ownership buffer smooths out the excesses.
If taxpayers had a stake in one or both Australian airlines, they would also be able to exert some influence and better scrutinise executive waste and mismanagement. Pre-pandemic, Alan Joyce, for example, was the world's highest-paid airline executive.
Our vast island continent is reliant on its airline industry. There is no other fast, efficient way to travel the huge distances between our cities, or to reach our far-flung regional areas.
It's time for the federal government to step in and secure the future of a viable aviation sector that serves more than executives and shareholders.
- Michael Kaine is national secretary of the Transport Workers' Union.