Not everything it’s cracked up to be

REFORMATION man John Howard may be contemplating the collateral damage inflicted by the deregulation of the airline and telecommunications industries.

The Qantas decision to axe the three weekly Boeing 767 flights between Tokyo and Perth is a kick below the belt for the WA Tourist Commission. It has managed to grow its share of the Japanese market at a faster rate than the eastern states and was looking forward to more than 56,000 visitors in the coming year. The blow is one of the unintended consequences of deregulation.

From October, when the services are scheduled to stop, the only way for the Japanese to get here will be via the very tight capacity routes from Singapore.

Qantas says the Tokyo flights will be restored around June next year, when Narita’s second new runway is operational – by which time the damage will have been done.

The airline claims the change is the result of increased demand for seats between Sydney and Japan, which is code for saying it needs to raise yield by carrying more business passengers. Earlier this year it pulled flights off the Canadian and China runs to bring extra planes back to for the battle to the death with Ansett, Virgin, and the late, lamented Impulse Airlines.

Everybody likes cut-price air tickets, not that we get much of a sniff of them here in Perth. But freedom of the skies has now resulted in one airline going belly up, and Ansett going into a nose dive, putting its parent Air New Zealand in deep trouble.

Far from benefiting from their plight, Qantas is fighting to maintain altitude. The national carrier will be the loser if Singapore Airlines gets its way in raising its 24.9 per cent stake in Air NZ to 49 per cent, and playing a big role in the rehabilitation of sickly Ansett. The unpalatable news about the Perth-Tokyo routes should be seen in that context.

It is a similar story in the telecommunications market. Rampant competition has brought us an average 13 per cent cut in local phone call costs and a drop of up to 53 per cent in the price of international calls. But what consumers gain with one hand, they often lose with the other.

Nearly two million mum and dad shareholders in Telstra have seen the shares dive from a high of $8.70 to $5.30. The demolition of its monopoly is not the only reason for Telstra’s woes – poor management and the disastrous involvement with Pacific Century Cyberworks in Hong Kong are also factors. But it is now getting ridiculous. ACCC boss Alan Fels is threatening to drag Telstra by the lapels through the courts, against the backdrop of the collapse of the One.Tel phone company and the implosion of the share prices of virtually all companies in the industry.

Who is the corporate winner here? Enter 78 per cent government owned Singapore Telecommunications and its $14 billion bid for Cable and Wireless Optus. Initially it was thought the Singaporeans might find it tough to meet the national interest test.

But the Australian Defence Department rushed to say it was happy that a merged Singtel-Optus could protect the integrity of its sensitive satellite and other communications infrastructure. The FIRB, which sent Royal Dutch Shell packing, will wave Singtel through with a chequered flag.

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