If you haven’t been paying close attention to the goings on at Qantas over the past week, give yourself a tick. I’m still trying to get my head around it and it’s making me nauseous. Let me see if I’ve got this right.
On the Qantas website it says, “When the carbon price was introduced, Qantas added a small surcharge to domestic fares to reflect the impact on our cost base and attempt to recover some of that cost. Since 1 July 2012, this cost recovery has been unsustainable due to the challenging conditions in the Australian aviation industry.”
So Qantas says it has recovered the cost of the carbon tax by placing a surcharge on domestic flights since 1 July 2012. However, it also says recovering that surcharge has been unsustainable because of fierce competition. But, correct me if I’m wrong, the surcharge hasn’t been removed; it is still there but price discounting has made it look like it isn’t. Is that right?
Well, a surcharge is a surcharge isn’t it? Price discounting is something else. The two are not connected. Discounting the price of a ticket doesn’t remove the surcharge does it?
Certainly the chairman of the ACCC (Australian Competition and Consumer Commission), Rod Sims thinks so. He has stated that when the carbon tax is repealed Qantas and any other company that passed the tax on to consumers will have to remove it. “We would have to look at the individual circumstances but we would assume that any surcharge imposed because of the tax would come off. We will engage with airlines to work out the details of their situation,” he told Lenore Taylor at The Guardian Australia. Lenore Taylor has also said that according to a spokesman Qantas recovered all of the $106 million it paid in the first year of the tax. This means that none of those companies that applied a surcharge, Qantas included, will benefit from the removal of the tax. The bottom line impact, therefore, both with a carbon tax and without it, is zero….isn’t it?
How bizarre can this get? First, we had Qantas issue a statement on the Monday saying that the carbon tax was not a factor in its financial problems. Then further into the week CEO Allan Joyce reversed that position when he said, “the carbon tax has been a big cost for us. It’s $106m last year. It’s going to be over that again this year. And it is absolutely one of the factors that is impacting the airline.”
Considering this was also the week the government announced that there would be no guarantee for what we were told was a struggling airline, but which we are now told is in good shape, one could be forgiven for thinking that somehow the three events are connected. Fran Kelly on ABC’s Breakfast Radio thought so.
In an interview with Joe Hockey on March 6th, the Treasurer explained Joyce’s apparent back flip. Fran asked Joe, “Has the Government, as the Opposition alleges, leaned on the carrier?” Hockey acknowledged that he had spoken to Joyce on 5th March. He said to Fran, “Alan Joyce rang me yesterday and we talked about it but it was nothing more than him saying, ‘The interpretation about the Carbon Tax was entirely incorrect. A low level person at Qantas put out the statement which is not consistent with either of his statements or his previous statements on the Carbon Tax’ and I said that’s a matter for you, that was about it. We certainly don’t put pressure on companies like that and Labor shouldn’t judge us by their standards.”
Really? How low level? Was this low level person someone in the mail room, a junior desk clerk, a typist? I doubt it. Corporate press releases are NOT given out by low level staff. But, no matter who issued the first statement, that doesn’t change the fact that the surcharge covered the impact of the carbon tax and the removal of it will make no difference to Qantas’ bottom line.
All this, of course, flies in the face of Prime Minister Tony Abbott’s claim in parliament this week when he said, “Just so that members of this house should know what the situation is, Qantas has today put out a statement to say: we have said that the price on carbon is a cost to our business that we have not been able to recover through fare increases … So there we have it: the carbon tax is a drag on Qantas that it does not need. It is a $106m hit on jobs at Qantas. We will get rid of the carbon tax, but the leader of the opposition wants to leave this $106m-a-year hit on Qantas in place.”
Apparently, the Prime Minister was not aware of either the surcharge or the ACCC’s intention to monitor its removal. If he did, he would not be saying that the carbon tax was ‘a drag on Qantas that it does not need,’ because clearly it isn’t.
One wonders just how bizarre can this farce get? One also wonders about the broader question of the ACCC’s intention to monitor the removal of all carbon tax costs that have been passed on to consumers. One could get very nauseous just thinking about it.
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