Login
Pressure rising: Aviation law sector braces for change
Having weathered the global financial crisis, the Australian aviation sector is seeing beginning to see increased activity -- but, as Briana Everett discovers, significant change lies ahead.…
Having weathered the global financial crisis, the Australian aviation sector is seeing beginning to see increased activity -- but, as Briana Everett discovers, significant change lies ahead.
| ALL SYSTEMS GO: The aviation sector is undergoing significant change, both from a regulatory perspective, as well as due to commercial pressures. |
But following the December 2009 release of the Federal Government's National Aviation Policy White Paper, aviation lawyers have been bracing themselves for change after the Government put forward a number of legislative changes aimed at guiding future growth, with safety and security labelled the "number one priority in aviation".
Cut to 2011 and the aviation industry is already undergoing significant change - despite a lack of progress on the Government's proposed legislative changes.
Having recently been the focus of public criticism due to safety concerns, on 16 August Qantas Airlines revealed it would slash 1,000 jobs as part of a restructure to save the struggling airline, which includes the set up of Jetstar Japan and a new premium airline based in Asia, as well as the purchase of up to 110 new Airbus 320 aircraft.
"What we have is an international business that's been underperforming for some time," Qantas CEO Alan Joyce told ABC News on 16 August.
"It has only recovered the cost of capital three times in the last 15 years and the situation has gotten worse with a high fuel price and high Australian dollar."
Allen & Overy was the firm advising Qantas, through its subsidiary Jetstar Airways, on the establishment of its new low-cost carrier, Jetstar Japan, through a joint venture with Japan Airlines and Mitsubishi. The new Japanese airline involves a commitment of up to 12 billion Japanese yen ($150 million) and forms part of Qantas' five-year strategic plan, which includes an enhancement of the joint services agreement with British Airways to strengthen the airline's Singapore focus.
"What it really emphasises is the importance of intra-Asian travel - the same with intra-Asian trade and investment, which is so critical to Australia and the region," said Sydney-based Allen & Overy partner Michael Reede, who led the firm's advisory team on the joint venture.
"In the Euro zone and North America, very, very low-cost carriers operate in that essentially domestic, regional environment. You don't find that in Asia but clearly the market is moving towards low-cost carriers like Jetstar."
| "With liability and insurance limits set to increase ... and some regimes to undergo potential fundamental change, the aviation industry remains in somewhat of a state of limbo" Glenn Biggs, partner, Carter Newell
|
Aside from the restructure of Qantas, Carter Newell partners Glenn Biggs and Paul Hopkins say there is a significant degree of activity in the competitive aviation sector, although they are still monitoring and anticipating the sector shake-up foreshadowed by the Government.
"While much anticipation for change came from the Government's 2009 National Aviation Policy White Paper, little has since come to fruition," said Biggs. "With liability and insurance limits set to increase ... and some regimes to undergo potential fundamental change, the aviation industry remains in somewhat of a state of limbo.
"Nonetheless, with 2010 being a very active year for property damage and personal injury aviation litigation, the start of 2011 has given aviation insurers a slight reprieve."
Working throughout Australia and across the Asia-Pacific region, particularly in the catastrophic accident area, Biggs and Hopkins are closely monitoring the Government's proposed changes to carriers' liability arrangements, which include an increased cap on liability for domestic passenger travel from $500,000 to $725,000 per passenger.
"It's a very broad ranging, ambitious document from the Government into which a lot of public submission went. But so far we're just monitoring how that's progressing and seeing how it tracks through to the law," said Biggs.
And whether these proposals eventuate, according to Biggs, depends on the political landscape.
"There's a lot of support for areas of the white paper but also a lot of people opposing it."
