News: Qantas pilot redundancies , page-71

The carefully avoided issues in a tiny Jetstar Asia profit

February 7, 2011 – 8:06 am, by Ben Sandilands


How long will it be before someone demands forensic financial proof that Jetstar Asia is a majority Singaporean owned flag carrier?

This is the topic that no-one in Singapore, not even Singapore Airlines controlled Tiger Airways, seems prepared to raise in public?

The belated announcement of a tiny profit by what Qantas always has no hesitation in describing as an important part of its offshore expansion plans steers clear of issues of control and equity.

On paper, Jetstar Asia is majority owned by the Choo Tek Wong but almost all the capital required in the restructuring of the airline’s ownership in 2009 came from Qantas. This is not a criticism of the deal, but it is important to ask what would have happened if Singapore Airlines for example were to give me 99.9 per cent of the money needed as a suddenly incredibly wealthy Australian national to purchase 51 per cent or more of Qantas so that it could in effect take control of the carrier.

Fanciful. Sure. But this is how Qantas has turned what on paper is a majority Singapore owned and controlled Jetstar franchise into an airline that the government of Singapore now recognises as a national flag carrier for the purpose of negotiating bilateral access with other sovereign states.

No-one in Singapore wants to talk about the possibility that this is a sham. Jetstar Asia is very good for Singapore, and its airport. Indeed, Jetstar Asia uses the more expensive main terminal, not the low cost carrier satellite, which makes it so much easier to get to for a few dollars on the Singapore metro, and in less than half a hour from many stations in continuous air-conditioned comfort!

But this is where a risk to the Qantas strategy in Singapore also could arise. Singapore has also tolerated the basing of Australian registered mainline Jetstar A330-200s (and future 787s, in the distant never-never land of that project) for the purposes of flying between Singapore and Japan, New Zealand, Europe and even Australia.

The Australian government is either in on this strategy, or oblivious to it, but Singapore is the key at the moment to making the Qantas Sale Act irrelevant. But if Japan, China, Malaysia, or the EU, dig in and demand to know why an Australian owned and controlled entity is seeking additional or new access between Singapore and their airports, matters could get tricky.

There is a strong argument that the Qantas strategy should be embraced in terms of open skies and international trade reform. But it is also an issue which raises the much larger question as to what exactly Australians and their government think their economy is actually going to do in the future. Is anything going to be made in this country? Are there going to be any jobs left after robot trucks do all all the coal and bauxite mining? And all the service jobs go to Bangalore? And all the airlines and the jobs involved in them are done by foreign controlled entities as icon after icon is waved off shore?

For a country which works on ponzinomics, and relies on debt funded growth, and can’t feed itself, or make things, or even retain control its own public utilities and transport infrastructure, the fate of a Qantas which appears to rely on Jetstar to survive is an interesting and obvious detail in a much