Qantas on track to collect $2bn of support as Morrison government criticised for not seeking stake

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One expert says a stake in the airline would give the government more influence over how Qantas uses taxpayer money

Qantas will have received $2b in government support payments by the end of 2021, the Transport Workers Union estimates. Qantas is on track to receive $2bn in government support by the end of this year, sparking criticism about the government’s failure to seek a stake in the company in return and concerns it will dominate the skies once Covid-19 restrictions lift. The airline collected more than $1.2bn in federal government support last year, including jobkeeper and aviation-specific programs – more than three times the amount received by its smaller competitor Virgin Australia.

Virgin Australia, which fell into administration last year after the government refused to bail it out, is estimated to have received about $368m while the regional airline Rex is estimated to have been given about $150m. The figures for Virgin and Rex include aviation funding and Guardian Australia estimates of jobkeeper payments, which have been disclosed by Qantas but not by the other two companies.

The Transport Workers Union estimates that by the end of the year Qantas will have received $2bn from the federal government. Qantas is also receiving assistance from the state governments of New South Wales, Queensland and Victoria in the form of tax breaks and tourism funding, which have not been included in Guardian Australia’s calculations. “By any stretch of the imagination $2bn should warrant a guarantee on return for taxpayers,” the TWU’s national secretary, Michael Kaine, said. “In many countries around the world large amounts of investments in airlines includes equity stakes or the potential for equity stakes, as we have seen in New Zealand, Germany, Korea, Hong Kong and others.” He said polling conducted for the union by YouGov last year showed 62% of people agreed that if the government bailed out private companies “it should insist on receiving part share in those companies in return for this money”. Instead, Qantas had “violated the spirit of jobkeeper” and outsourced the jobs of 2,500 ground workers during the pandemic, he said. “The Federal Government failed to tie any conditions to the funding for Qantas. It has failed to set down any rules on retaining jobs, banning outsourcing, ensuring air travel to regional Australia, capping senior executive salaries, banning bonuses and banning dividends,” Kaine said.

The Morrison government has consistently opposed taking a stake in Qantas. “It is not the government’s intention to nationalise airlines,” the then deputy prime minister and minster for transport, Michael McCormack, said in May last year. “We want them to continue to be commercial operations. We want the aviation sector to come out the other side as best it can.”

Greg Bamber, a professor at Monash University’s business school whose specialties include aviation, said it would have been smarter for the Morrison government to take a stake in Qantas in return for the money. “Smarter governments that supported airlines can insist on appropriate conditions, for example, prohibiting such airlines from paying rewards that are much too high to their shareholders and executives,” he said. He said a federal stake could also have helped shape the post-Covid economic recovery by giving the government a say on Qantas “accepting huge funding from taxpayers, which helped to fund very high levels of pay for the Qantas CEO and executives, while outsourcing 2,000 jobs to workers who are paid less than their Qantas counterparts were paid”. “As Qantas is accountable only to its shareholders, it is less considerate of its customers and its dedicated workforce – Qantas has laid off thousands of them.” Bamber said regulations should be toughened “to tame Qantas’s ferocious short-term competitive tactics that try to quash its smaller rivals Virgin Australia and Rex” on regional and established routes. “Such unregulated competition could lead to another airline collapsing,” he said. “A collapse of the competitors would be against the interests of the Australian community as it would allow Qantas in the medium term to become a monopoly, charging high fares and providing poor service.”

A Qantas spokesman said the company had lost $16bn in revenue since the start of the pandemic and was on track for a loss of about $2bn this year – on top of a $2.7bn loss last year. “Qantas has a 70% share of the domestic market and is the only Australian airline that flies internationally, so it’s no surprise that we’ve received a significant proportion of the government assistance for airlines,” he said. The majority of the government support Qantas received was jobkeeper, the spokesman said, “which was a lifeline for our employees who were stood down”. “The rest was fee-for-service including repatriation flights to bring Australians home and vital freight services to keep goods coming in and out of the country. This in turn generated paid work for our people.” Qantas “fully complied with the spirit and purpose of JobKeeper – including recognising when jobs aren’t coming back and making those jobs redundant,” he said. And he said the company did not engage in predatory pricing on regional routes. “With international borders closed, there is more demand for domestic and regional travel. We don’t start routes if we don’t think they will be commercially viable for us.”