A ravaged aviation sector would be a major drag on Australia’s long-term economic recovery. The benefits for consumers from any short-term price cuts would be outweighed by the negative effects of reduced competition and capacity once it is safe to lift travel restrictions. The future looks particularly bleak for the estimated 666,000 people working in tourism if domestic customers become beholden to one carrier, or if their international markets experience prolonged fragmentation.
Saving Virgin Australia from collapse is obviously the immediate issue. But we should simultaneously define what kind of skies we want to be flying in and the steps Australia must take to make our aviation sector less susceptible to future shocks.
This paper aims to set out principles for developing such a plan and providing increased policy direction to the private capital that is seeking to ensure Australia’s aviation sector is ready to fly.
It draws on existing statements by government ministers to articulate how well-established principles around competitive neutrality, market-led solutions and protecting taxpayer interests should be brought bear in aviation.