Originally Posted by busdriver007
You are wrong, In Australia ANY airline can set up, irrespective who owns it. This is unlike any country in the planet. I would not be surprised if CX does just that and there is nothing QF can do about it because the Government has already opened the doors!
Only domestic airlines may be foreign owned in Australia, international airlines need to be majority Australian owned. Hence Virgin domestic AOC is majority foreign owned, and Virgin international AOC is majority Australian owned. Two airlines, one brand.
Australia also does not permit airlines from most countries to pickup and fly internationally beyond Australia, where Australia requires that of most countries in order for them to operate into Australia. Hong Kong does permit airlines to pickup passengers in Hong Kong and fly beyond, eg the Qantas Hong Kong London route, Qantas can sell tickets on that leg commencing in Hong Kong.
In Hong Kong, there is no local ownership requirement, when Qantas made their application the structure was 50% Qantas, 50% China Eastern, no local ownership (that came later). The requirement in the EU, Hong Kong and a few other places in the world the requirement is for the PPOB to be in the state, the place where the majority of the airline operations are conducted.
Jetstar failed in Hong Kong as being a franchise of the Australian operation, key airline functions under the Jetstar service agreement were not going to be performed in Hong Kong, they were going to be performed in Melbourne, like they are for the other franchises. Other key features were that Jetstar Hong Kong was not able to self determine routes and fares. Jetstar would not provide competition on routes Qantas, China Eastern and their subsidiaries operate.
The other silly part of the application was applying for around 250 routes out of the gate with 6 aircraft, no new airline with a handful of staff can have the systems, processes, and people in place to manage that route structure to the satisfaction of the regulator. It is no secret that the Hong Kong regulator put the brakes on other operators when they see the see them expanding too quickly. Why they did not start with an application with a handful of routes and build on that is beyond me. What do you think CASA would had said to Virgin if they wanted an new international AOC with a handful of 777s to cover 250 routes ?
The difference between the requirements Australia works under (majority ownership and control), and what Hong Kong works on (PPOB) is even with majority local ownership, companies can offshore most of the operation, and there can be reduced local regulatory oversight of that operation. Money also leaves the state, and maybe taxed elsewhere. Classic example is Google only pays tax in Australia on a gross income of around $70,000, the billions of dollars of "operations" being generated in Australia are being "performed" elsewhere and the government misses out on that significant tax base. In an airline context it means money that could otherwise be used to pay for local aviation initiatives is going elsewhere.
ICAO identified this problem in the 1980s/1990s when complex financial instruments being used to structure airlines on paper appear to be show them as being locally controlled. They changed the recommendations from majority ownership and control to PPOB. The ICAO standard air service agreements used in Australia with the majority of countries now use PPOB.
With PPOB the requirement the local content is increased, so is the local regulatory oversight. It encourages foreign investment, while building the local industry.