Australia’s second major airline, Virgin Australia, went into voluntary administration in late April. This came after the company stood down 8000 workers as demand for flights plummeted due to the COVID-19 crisis.
While the COVID-19 pandemic has pushed Virgin to the brink, the company’s issues are much deeper. For years the airline has been taking advantage of low interest rates, borrowing billions to expand the business.
They were left badly exposed when the pandemic hit, unable to service nearly $7 billion in debts. The total collapse of the company is now posed with the potential for devastating impacts on the economy, and lives of tens of thousands of associated workers.
Without Virgin, Qantas Airways would be handed a virtual monopoly over air travel in Australia. The dominance of one for-profit airline would no doubt result in higher prices that will hit tickets and the cost of the transport of goods.
A debate is now underway about how to save Virgin, and stop Qantas from having free rein over the industry. Unfortunately, much of the commentary is centred on profit interests and none of the solutions put forward focus on the workers or the wider community.
The Liberal government hopes that private investors can rescue Virgin. They have resisted calls to bail out the company, saying that 90% of Virgin Australia is in the hands of international corporations.
While a private takeover would save the government money, it would be disastrous for Virgin workers. Any new private owner will likely slash jobs and seek to reduce the conditions of those that remain. The race to the bottom with Qantas will continue.
The other reason the government wants to avoid a taxpayer-funded bail out is that it would open the door to other corporations, including Qantas, asking for government hand outs. With the economic conditions set to get worse they worry about how far this could go.
The opposition Labor Party, and a number of trade union leaders, have called for a line of credit that will keep Virgin Australia operating. They support the idea of the government loaning the airline money, and then taking a stake in the company if they are unable to pay it back.
But there are also problems with this approach. Propping up failing private companies with public money means that while taxpayers carry the risk, the profits are kept in private hands.
Alternatively, if the government ended up with a small stake in a for-profit airline it would have no real control over how the company was run. Management would still be in the hands of those who created this mess.
Neither taxpayers or Virgin workers should be asked to pay for the company’s problems. They did not create this crisis and they are not the ones who have profited over the years. The capitalist owners of Virgin are responsible. They should not be able to get away with this and continue the profiteering later.
The best way to save Virgin would be to take it out of the hands of reckless private investors. Airlines are essential services and they should be operated for the public good with the profit motive removed.
Virgin should be nationalised with compensation given only on the basis of proven need. While small shareholders could be bought out, the wealthy shareholders who have made a return on their investment should be told to hit the road.
Ideally, Australia would have a single national airline that was publicly owned and democratically run. Without the profit motive, there would be no basis for to rip-off customers or engage in risky business.
Control and management of public assets should be in the hands of the workers themselves, with input from the wider community. This would be the best way to boost productivity and efficiency, while also taking into account the needs of the environment.
Taking airlines and other key industries into public hands is the first step towards planning the economy in a democratic way so that the wealth we create can be used to benefit ordinary people.
This is the approach the workers movement needs to adopt.
By Triet Tran