Australia: in isolation mode, expect more flight reductions from Virgin, Qantas and REX
Australian State and Federal Governments are closing things down. With several states ‘closing’ their borders, most particularly island Tasmania and South Australia, with Queensland talking in similar tones, it is likely that all airlines will be clipping their interstate wings.
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As well as ceasing international routes, Virgin has made a statement that it expects to make a ‘material reduction in its domestic capacity’ after the Australian government spoke out against non-essential domestic travel. Any reduction is likely to cover both airlines they run – Virgin and Tiger.
This regional airline that previously flew in many regions of Australia, has pulled back its flights and frequency. Some of its regional destinations rely on the REX service, so it has a bit of leverage when it threatens to withdraw from some routes unless the ‘federal and state governments are willing to underwrite the losses’.
It argues that there is a point where you have to move from cutting back services to abandoning communities, and they are using this forceful argument to ‘blackmail’ the government into promising more financial support before the end of this week.
The argument is on their side, but I have not heard them making any of the conciliatory noises Qantas and Virgin are making, like directors and senior management foregoing their salaries and benefits during this crisis, or shareholders pitching in to support the company.
I have said it before, and I will say it again. These shareholder companies always want us to support them through taxpayer payments or cheap loans when they are losing money, but do you ever hear them say that they will pay any extra taxation when they are making money hand over fist?
Privatisation of profit and the socialisation of losses – again.