Are the Australian air wars about to land in court?

Wednesday, 20 November 2013  Media Alerts

"The current campaign by Qantas is designed to perhaps confuse the market... is Virgin really Virgin Australia?" asks a senior academic at the Australian School of Business. "Virgin dropped Blue and adopted Australia in its name for a reason; it wanted to be the new national carrier. Seeking funding from overseas isn't going to stop that - indeed, it will help it."

Michael Peters, a lecturer in Business Law and Taxatio​n at the Australian School of Business was responding to news that Virgin is threatening legal actions against Alan Joyce, CEO, Qantas, accusing him of trying to ground Virgin's capital raising.

Qantas has now launched an online campaign against a capital raising plan by Virgin that could leave 72 percent of the carrier in the hands of Singapore Airlines, Air New Zealand and Abu Dhabi-based Etihad, who already own 63 percent of Qantas' main domestic rival.

"Joyce claims there are unlimited funds available to Air New Zealand, Etihad and Singapore Airlines which will weaken Qantas," said Michael Peters. "However this isn't really the case - Qantas may have confused the public at the very least."

He teaches tourism law - including aviation law - at UNSW Australia, and has written several books on the history of tourism and the law. "In the world of perception, image is everything. Right now Qantas is trying to make itself look as if it is being hard-done by, because the bright shiny image of Virgin Australia has eaten into Qantas market share. And now, Virgin has sought very competitive funding to expand and take even more of the traditional Qantas market."

"If successful in its legal action, Qantas would do what most advertising rarely succeeds in doing, and dent the perception so carefully crafted by Virgin Australia of even getting John Laws to sell the 'Australian' nature of the carrier. Unless Virgin Australia starts its own counter campaign to reinforce its image, it looks like legal action may be a viable but uncertain alternative."

Qantas is limited by the Sale Act when it was privatised in 1995, which limits foreign ownership in the national carrier to 49 percent.

"Using trade practices to curtail the efforts of Qantas may be a clever move, however it may also backfire as traditionally the use of such laws has been less than stellar. Instead it can just bully the other party so that Qantas review their current efforts to muddy the waters and give the Australian public a perception that just isn't there."

For comment please contact Michael Peters on 02 9385 3251, 0430 043232 or Email m.peters@unsw.edu.au

Media contact: Julian Lorkin: 02 9385 9887

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