Aussie open skies policy is just hot air: Koh

The Australian AVIATION, February 28, 2007
by Glenda Korporaal



FORMER chairman of Singapore Airlines Boon Hwee Koh called yesterday on the federal Government to open up its airline policies.

Speaking at a conference on private equity in Sydney yesterday, Mr Koh, who is now chairman of the Development Bank of Singapore, said Australia did not "walk the talk" about having a free market economy when it came to allowing foreign airlines to operate in Australia. One of Singapore's leading businessmen, Mr Koh was chairman of Singapore Airlines from 2001 to 2005 after being chairman of Singtel for six years.

Singapore Airlines has been unsuccessfully lobbying Canberra to be allowed to fly from Australia to the west Coast of the US.

Mr Koh said he thought the current $11 billion bid for Qantas by a private equity consortium was "extremely good for Qantas shareholders". But he said that regardless of the outcome of the bid for Qantas, the Government should be more open about letting foreign airlines operate in Australia.

"Regardless of whether there is a bid (for Qantas) or not, the Australian Government should have been more open," he said.

"Because that is what you profess to be - an open economy.

"But, as we all know, talk and walk are two different things."

Mr Koh said the Singapore Government had taken a deliberate policy to promote Singapore as a regional hub for airlines from around the world rather than protecting Singapore Airlines.

"The Singapore Government has stated that it is in favour of an open aviation environment," he said.

"If the countries can get together and do away with the 51 per cent (local) ownership rule it would be a positive.

"As far as Singapore is concerned the emphasis of the country is on it being an air hub and not being an airline.

"That is the reason, if you are Qantas or Jetstar, you can come into Singapore.

"You can be anybody and you can start an airline in Singapore."

He said the Government's funds management arm, Temasek, had an investment in the Qantas-controlled Jetstar Asia which is based in Singapore.

"That is walking the talk," he said.

Mr Koh said the current bid for Qantas was being watched by the airline industry around the world.

"The bid is extremely good for existing Qantas shareholders," he said. "In the publicly traded market for the airline industry, will you ever be able to achieve those kind of valuations? The answer is almost never.

"Qantas is already one of the world's best managed airlines and one of the world's most profitable.

"For some reason the public markets will never value airlines the way some private equity firms might be willing to do."

Mr Koh said he did not know what the private equity consortium planned to do with Qantas.

But he said that to make the private equity deal work, given that it was pitched well above pre-bid market levels, the consortium would have to substantially raise revenues or cut costs.

"If you are going to make that valuation successful then it has got to be predicated on an ability to expand revenues and more aggressively than has been done in the past, or to operate the existing business with less cost than you than you have done in the past."