The paper "Qantas Airline - Bailout Debate" is a great example of a business case study. In Australia, the role that the government played in relation to corporate operations has been the biggest issue that led to the rise of mixed reactions and arguments for a very long time. Due to the need of the Australian government to intervene and bail out the private companies, the debate over the private corporation's ownership was reopened for the second time in the year 2014. Qantas Airline made a support request to the government to help the corporation overcome its difficult financial challenges.
This prompted a raging debate over whether the government should honour this request or not. It became quite challenging for the Australian government to make a decision because other Airlines especially Virgin Australia made it clear they were against the proposal and that they will also request the same support if the government accepts Qantas Airline request. Some other Airlines proposed that the government would give Qantas debt surety because the corporation was being heavily regulated and that it was facing tight competition from overseas governments.
This paper discusses the debate on ‘ bailout’ issue of Qantas Airline and argues that the Australian government stance was justified by drawing upon theories of the role of the state. 1920 was the year the Qantas Airline was founded as an Australian carrier. According to Lafferty (2012), in 1947 the Airline was nationalised and later on privatised through the Qantas Sale Act 1992. Several provisions were included in the Act in an effort to maintain the status of the enterprise as a national airline. The move also aimed at ensuring Qantas Airline remains a primarily Australian owned, operated and managed corporation (Lafferty 2012).
According to Morrel (2013), restriction of overseas proprietorship was capped at 49 %; no overseas airlines can own more than 35 % and overseas personnel are limited to possession of no more than 25 % are part of the provisions of the 1992 Act. Besides, the Qantas 1992 Sale Act necessitates that the 2/3 of the airline executives must be Australian citizens and the presiding executive at any board meeting to be a citizen of Australian.
The 1992 Qantas Sale Act also outlaws the integration of Qantas in overseas states apart from Australia. These legal requirements were part of the debate on the Australian government bailout to Qantas Airline. Qantas Airline “ bailout” debate is a perfect example of the role government has incorporated. In most of the advanced democracies such as Australia, the role of the government in business has changed. Stiff competition and globalisation have obliged a prompt reply to successfully deal with issues presented by globalisation. According to Mendoza & Vernis (2008), the welfare state is also undergoing overload on communal resources.
This disagreement was provided to defend the sate not to pledge debt to Qantas Airline. It was argued that the airline has to be bailed out for it to remain competitive. It was thought that sponsorships would guarantee that the Qantas airline can compete meritoriously with airlines such as state-backed Virgin Australia. Nevertheless, a business strives efficaciously in the market by building a viable advantage (Longenecker & Ariss 2002). By presenting subventions to the airline, Qantas would have been dependent largely on corporate welfare.
In this case, the company could not be internationally competitive because an aggressive organization deliberately uses available resources for it to compete hence evading financial catastrophes. In evading financial predicaments and major firm disappointments, administrations have opted to debt guarantees (Suarez-Villa, 2015). This is seen as a system of commercial welfare. As a result, government debts obligations have increased to an unmanageable level that looms the financial apparatus of the state. Faultfinders point out that by pledging debt to Qantas Airline, it would definitely increase the debts of the government which is already overloaded.
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