SYDNEY - The Australian government Tuesday said it wanted to put Qantas on a "level playing field" with its rival airlines but indicated it would not remove a cap on foreign ownership.
Transport Minister Anthony Albanese said the government wanted to maintain the legal requirement that the country's international airlines, including Qantas, were at least 51 percent Australian owned.
But he said that it may be timely to consider whether additional ownership restrictions imposed on Qantas were appropriate.
Under the Qantas Sale Act individual foreign airlines can currently hold a maximum of a 25 percent stake in the company and aggregate foreign airline interests up to 35 percent.
"By removing that, but maintaining the 51 percent Australian ownership of Qantas, I think you would achieve an outcome that is balanced," Albanese told the National Press Club in Canberra.
The foreign ownership limit could potentially frustrate any attempt by Qantas to merge with a rival carrier, a move former Qantas chief executive Geoff Dixon last week said was desirable given the challenges facing the industry.
Albanese said while the government wanted to move towards greater liberalisation of the sector, Australia's interests were paramount.
"It is not in the national interest for that cap to go," he said.
"That doesn't mean that there can't be consolidation or alliances. It is a constraint on the form of them but I think that we have got the balance right."
He said because of Australia's location as a distant island continent, the aviation industry was important not only for economic but security reasons.
"At each step we need to make sure that the Australian national interest is also looked after," he said. "Because we, unlike the mid-hemisphere airlines, aren't on the way to anywhere."
He pointed to the fact that he had called Qantas chief executive Alan Joyce on Saturday evening to ask for assistance in bringing home Australians stranded by political unrest in Thailand.
"I didn't get an equivocal answer, I got a 'Yep, whatever we can do'," he said. "You actually can't do that unless you have national based airlines."
Qantas said while it was unlikely the 49 percent limit on foreign investment in Australian international airlines would change, the government's preparedness to look at other ownership restrictions was welcome.
"This is a step in the right direction which will set us on an equal footing with other Australian international carriers," Alan Joyce said in a statement.
Albanese, speaking at the launch of a discussion paper on aviation ahead of reforms to the sector to be announced in 2009, said the government had no plans to increase foreign airlines' access to the lucrative Australia-US route.
And he said a second international airport for Sydney was also on the cards, but refused to rule any site in or out except to say that the government preferred it to be outside the city's basin.
"No airport issue has been more controversial or long-standing than Sydney," he said.
"The need for additional capacity in Sydney has been acknowledged but the challenge is obviously finding the right site for a second airport."