Those who remember the collapse of Ansett say Virgin must be saved, or risk thousands of jobs, a Qantas monopoly, and higher fares Dozens of planes sitting idle on the tarmac. Thousands thrown out of work for years. Sky-high airfares. People who were around last time a big Australian airline collapsed say what happened then paints a grim picture of what could happen if the government allows the stricken Virgin Australia to go under. The collapse of Ansett in 2002 was “shockingly devastating”, the former opposition leader Bill Shorten says. He was the national secretary of the Australian Workers Union at the time and saw 500 of his members lose their jobs. “Pilots committed suicide, a lot went overseas.” Families that relied on the airline suddenly had no income. “Ansett had been a generational business – a lot of people had given two or three generations to Ansett,” he said. Now, Shorten fears history will repeat itself, costing thousands of jobs and handing bigger rival Qantas a lucrative monopoly, unless the Morrison government abandons its opposition to bailing out Virgin Australia, which is fast burning cash after its fleet was grounded due to the coronavirus pandemic. Qantas is also burning money as its planes sit idle – but it had more money to begin with and can last longer. Estimates of how long Virgin Australia can last vary, but the airline is generally said to have less than six months of cash on hand while Qantas can wait out up to a year. Virgin Australia’s situation is now so bad that the company is considering calling in administrators – one of a range of fast-dwindling options to try to keep operations viable until the day, however many months from now, that the situation allows airlines to fly again. On Thursday night, deputy prime minister and transport minister Michael McCormack announced the government would pay Virgin and Qantas to maintain a skeleton schedule of flights around Australia. But while the money allowed Virgin to keep a handful of planes in the air, and 200 staff in jobs, it only covers the cost of running the flights. This means it does nothing to staunch the outflow of precious cash needed to pay the cost of keeping the rest of Virgin Australia’s 130 planes on the ground and making repayments on its $4.8bn in debt. Private equity players are reportedly circling the stricken airline, but sources say they are unlikely to buy in without government support. Without government money, administration could come within days or weeks. “We are clearly in crisis mode,” Virgin Australia chief operating officer Stuart Aggs said on Friday at an industry roundtable organised by the union movement. “We are an airline and an industry under significant scrutiny, almost on an hourly basis.” Virgin Australia has asked the Morrison government for a $1.4bn loan as part of an industry-wide support scheme. But a bailout for Virgin Australia is fiercely opposed by Qantas and its chief executive Alan Joyce, who has bitterly sledged the loss-making airline for what they claim is poor management over a decade. Qantas also says no taxpayer money should be used to support a largely foreign-owned company. The attacks have been so vigorous they are being investigated by the competition watchdog. And although McCormack says the government is committed to keeping two airlines in the air, the government has yet to come up with a plan to make sure it happens. The source of the sector’s woes is different, but in broad strokes the industry’s situation is similar to the one it confronted at the turn of the century. Back in the 1990s Australia had two major airlines, the privately owned Ansett and Qantas, which started the decade in government hands but was progressively privatised by the Hawke government. As part of the process of privatisation and deregulation of airlines, Qantas acquired TAA, flying domestic routes for the first time. By 2001, Ansett was on its knees and Qantas was looking to take it over. Allan Fels, who headed the Australian Competition and Consumer Commission at the time, said the regulator was faced with a terrible choice. “The ACCC had to decide whether Qantas could take over Ansett or in the interests of competition let Ansett go under,” he told Guardian Australia. “The ACCC agonised over the possibility of saving 15,000 jobs, but handing Qantas a monopoly.” The terrorist attacks of September 11 2001 meant the ACCC never got to decide. “We were all set to make a decision but at the very last minute 9/11 occurred, the New York twin towers bombing, and Qantas decided it didn’t want Ansett.” The following year, Ansett collapsed. “I’ll just assert that fares went up,” Fels said. At the time of the collapse, pilot George Kailis flew for Kendell, a regional airline that was a subsidiary of Ansett. Now, he’s a Boeing 737 captain with Virgin Australia, and the vice president of the Australian Federation of Air Pilots. He says that although he was lucky and went to work for regional airline Rex, many pilots found it tough to get a job after Ansett collapsed. He is fearful that pilots could again struggle to find work. “You can’t just walk into a job, you just don’t end up back in the position you’re in,” he said. “For a person like me that’s got 17 years flying a 737, who has been a captain for a number of those years, that won’t mean anything to another airline unless I go overseas and take contract jobs that have time expiries to those contracts.” A strict licensing regime that requires pilots to continuously keep their flying skills up-to-date is one of the reasons he thinks it would take between three and five years to start a new airline in Australia should Virgin collapse. “It’s a massive capital expenditure, and then you have the training pipeline that’s going to occur,” he said. “It would take six months, on average, for every single pilot.” Consumers would also suffer – Kailis said fares have fallen by more than a third since the early 2000s. “You’re going to go back to pretty much a monopolistic system,” he said. “Airfares would go up.” Shorten remembers the Ansett collapse well. “I was 32 at the time, Osama Bin Laden had just hit the twin towers, and then Ansett – it was a terrible time,” he said. He said the airline’s pilots scattered. “It was just such a loss of skills, too,” he said. “It takes years to train, not just pilots, but avionics engineers… [and] skilled engine engineers. “We were a centre of maintenance excellence in Australia. Now a lot of work they used to do just gets sent overseas.” As for consumers, “it’s very straightforward – cheap airfares go” and routes get cut once competition disappears. “If you want to have cheaper airfares you’ve got to have genuine competition. “For me, the government’s handling this all the wrong way, they’re saying, ‘Oh, someone will come in,’ – well, no they won’t, we’ve got cabotage rules and frankly who wants to have a budget airline out of Asia flying between Melbourne and Brisbane? With foreign crews? “That’s just not how it works. So what it’s going to lead to is a monopoly and monopolies are not good for working people.” Fels said there was also a potential problem if Virgin Australia’s Chinese shareholders tried to take full control of the airline because it would face scrutiny from a Foreign Investment Review Board newly empowered to examine every offshore takeover bid. “In the past, Firb was not much more than a symbolic investigation of foreign takeovers, occasionally objecting, but now there’s a long list of concerns including security concerns and the preservation of essential Australian firms,” he said. Shorten dismissed the argument that Virgin Australia shouldn’t be bailed out because it is foreign-owned as “crap”. “Qantas is 40% foreign-owned with the shareholdings as it is. “Rex is majority foreign-owned and the government just handed out their National Party donors money no worries.” (Rex donated $44,000 to the National Party and $21,000 to the ALP in 2018-19, the most recent year for which Electoral Commission data is available.) Shorten said: “For the party of competition to do nothing to maintain competition and allow a monopoly, the fantasy of a foreign airline … “Foreign ownership, well, you know, for me it’s about where the jobs are. It’s more strategic to have an airline than not have an airline.” He says the federal government, state governments and super funds should all be involved in making sure this happens. On Saturday morning, the Queensland state development minister, Cameron Dick, announced his state would offer Virgin $200m, conditional on debt restructuring, and also shareholders, bondholders and the federal government chipping in. The airline’s headquarters would also need to remain in Brisbane and regional flights would need to continue. Labor wants the federal government to take an equity stake in Virgin, rather than handing out support payments, so that it can share in the upside when the economy restarts and people start flying again. “Why in this country do we keep letting things go when with a little bit of effort we could save them? “Once you’ve got some equity – they’re giving money away, this is at least something that would be an asset on the balance sheet.”