Forum Archive Index - September 2001

["Gary Wilson - Brisbane" <fastmail@bigpond.net.au>]

There has been a lot of finger pointing, but few commentators seem to recognise this is a very difficult business with high fixed costs and continuing lumpy capital expenditure requirements.  These underlying economics force the players to "protect market share at all costs".  At the same time the regulatory network and government pressures force the players to service uneconomic routes.  New players who get the infrastructure on the cheap, force prices down, marginal pricing strategies flourish and selectively compete in the most profitable segments.  This problem (Ansett) has been a long time coming - it is only a matter of degree - if Air Singapore was now the major shareholder in Ansett, there is considerable certainty they would be throwing cash at it to keep it afloat.  There has been under-investment in Ansett for many years - Newscorp astutely (or with good fortune passed the parcel) and then some parts of Aussie blame Air New Zealand for the current predicament.  There are a lot of symptoms and contributing factors here - but has the Aussie Elite really understood the core causes?  After all it is the Governments role to create suitable environments for all industry segments to flourish.