Interview with Stephen Cenatiempo, 2CC

6 August 2024

STEPHEN CENATIEMPO: We're joined by the Shadow Finance Minister, Senator Jane Hume. Jane, good morning.

JANE HUME: Good to be with you, Stephen.

STEPHEN CENATIEMPO: Um, look, there's a couple of things I want to address here. I, for the life of me, don't understand why we have these uncompetitive processes in place in the first place, but it's a bit hard to blame this current Government, because this has been going on for a long time. Qantas and Virgin have basically been able to pick and choose who their competitors are for years.

JANE HUME: Well, it's extraordinary that, you know, the Coalition's been calling for an urgent crackdown on anti-competitive behaviour in the aviation sector for two years, but it's taken the failure of not just one, It's not just Rex, let's remember, it's also Bonza. So it’s two airlines that have failed now for Labor to realise that we need this competition. I feel that Catherine King might have been on autopilot herself here. So we are very pleased that there are going to be changes, but let’s look at what they do, not at what they say.

STEPHEN CENATIEMPO: But why didn't the Government, the Coalition do something with its nine years in power in the same field?

JANE HUME: Well, in fact we did. We initiated the review, the Harris review, which is exactly what Catherine King is responding to now and unfortunately that review, which came up with these very specific recommendations, reported at the beginning of Covid. At that point in time, airlines were facing very different issues to competition, just keeping them viable was the problem at that stage. But we know now that the Albanese Government, is essentially blaming Rex, blaming management decisions for the collapse of Rex, but refusing to admit that there have been challenges that have been impacting the airlines that include competition, obviously that competition between Qantas and Virgin, but failing to act on regulations that enable that anti-competitive behaviour and the poor business conditions in the Australian economy, including things like union friendly IR laws, that are really putting the squeeze on airlines and there’s some pretty poor financial management thats causing inflation to rise and making it much more difficult for businesses, right across, not just the aviation sector, but right across the whole economy.

STEPHEN CENATIEMPO: Yeah and all of that, I’m not going to argue with any of that, but when we look at Rex specifically, most expects, and I’m not talking about the Government here, I’m talking about experts in the aviation industry are pretty clear that the uncompetitive slot situation is only one of the issues that Rex faced. I mean firstly, they tried to take on a different style of aviation that they were successful in for many many years and they have an ageing fleet that hasn’t been addressed. None of that can be pinned on the Government?

JANE HUME: Well certainly not, but at the same time, making sure that there is a competitive airline industry, is the only way to make sure that airfares are affordable for ordinary Australians and Canberra is a great example. You can probably remember when Tiger Airways were flying to Canberra, that airfares were much cheaper than they are today. So there are things that the Government can do and it does feel like they’ve taken their eye off the ball here. Now, I’m very pleased that this change is going to occur, it is about time that this review, initiated by the Coalition, commissioned by the Coalition, is being responded to. That said, I’m hoping it’s not too little, too late, because Rex is such an important airline, particularly for regional communities. I’m out here in Shepparton today and it’s places like this that rely on Rex. When I was in Alice Springs, they were telling me that without a viable airline and a viable airport, they basically can’t, and it’s not just supplies and goods and services. It’s actually people too. They can’t get teachers for their indigenous schools over there, from other cities, unless they know that they can get back to those cities at a reasonable price and reasonably often, for family weddings or a funeral or whatever it might be. This is the only way we can keep these regional towns alive.

STEPHEN CENATIEMPO: My only fear here is that the conversation around Rex is masking a broader problem here. Because Rex have traditionally been a regional airline and they do great work in regional areas. But traditionally, Australia has not been able to support a third airline and it's not just, um, uh bonza. And it's not, you know, Tiger and it's not, um, you know, we've seen Compass go. There were two different iterations of Compass. Every time a third player tries to come into the market, it doesn't matter who's in Government, they can't seem to survive. Is our market big enough to sustain three airlines?

JANE HUME: Well, there's no doubt that without Government will, it won't be and we did seem to see a bit of a protection racket running for Qantas last year. For instance, the Government was denying Qatar Airways those additional 28 slots at airports around Melbourne, Sydney and Brisbane, that would have brought the prices of airlines down. That was uncovered, in fact by the Cost of Living Committee that I Chair, where we had Alan Joyce appear in front of it and Senators from right across the chamber, all parties were questioning Alan Joyce about the decisions that he had been making in conjunction with Government that had prevented new competition in the airline space, that was costing Australians more.

STEPHEN CENATIEMPO: This tender that's going out now to allocate slots only at Sydney Airport, so it doesn't apply to the whole country. I asked Andrew Leigh this question earlier this morning and the answer was, well, because it's too complicated. Why isn't there some statutory body that decides on airport allocations right across the country? Because the reality is that you can't fly out of Sydney unless you're going to land somewhere else.

JANE HUME: Well, some of these airports are privately owned, or they can be owned by, for instance, your superannuation fund. But I do feel that there is a space, there is room now for intervention or at least oversight by the Government as to how these vital pieces of infrastructure, critical pieces of infrastructure are operating. Having a competitive lens on the airline industry is just as important as having a competitive lens on the supermarket industry, for instance. On banking sector, you know, we do it for other industries. Why aren't we doing it for airlines?

STEPHEN CENATIEMPO: So do you, in your view, once this tender is allocated and somebody actually gets involved, gets in and starts allocating these slots. What are you expecting? How are you expecting it to open the market up?

JANE HUME: Well, my concern is it might be too little, too late. That Rex potentially could already go under if that was the case and we're still stuck with only two airlines that are, you know, controlling our airways and our airfares. More importantly, I would hope that there is opportunity for new entrants into the market. But it's a very tough and very competitive as we know, space and an expensive one with high barriers to entry. So let's hope it's not too little, too late and that the Government hasn't failed to, you know, because it could have acted two years ago when it had this report presented to them.

STEPHEN CENATIEMPO: Jane, really good to talk to you this morning. Thanks for your time.

JANE HUME: You too, Stephen.