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Time to re-nationalise Qantas

An airline needs three things to have a chance of success:

  1. Capital, in order to buy or lease aircraft;

  2. Staff, in order to fly aircraft and service customers; and

  3. Paying customers.

After locking out the unions and grounding all aircraft on 29 October 2011, Qantas will find each of these three ingredients in short supply.

Investors and banks will be reluctant to lend Qantas money.  Staff will no longer trust Qantas management.  And the 58,000 people per day left stranded around the world, along with many other potential customers, will have far less trust in the reliability of Qantas.

Qantas is of great economic and strategic importance to Australia, which suffers from the "tyranny of distance".

Australia's tourism industry is already suffering due to the high Australian dollar, which has been pushed up by high commodity prices and high interest rates relative to other advanced economies.

Not only has Qantas trashed its own brand, but has also tarnished Australia's brand.

It is time to re-nationalise Qantas.  The federal government, or it's future fund, will be able to pick it up for a song.  Then the government will need to quickly appoint a new board and management team.

Many of Qantas' competitors on international routes, where it says it is losing money, are government-owned.  Time to level the playing field.

Charlie Nelson
October 2011