SYDNEY - Australian Treasurer Joe Hockey on Thursday raised the prospect of allowing majority foreign ownership of national carrier Qantas in the face of increasing overseas support for rival Virgin Australia.
Qantas chief executive Alan Joyce has been lobbying politicians in recent weeks about what he claimed was no longer a level playing field in the nation's skies.
His main gripe is that Virgin Australia is now majority-owned by state-backed carriers Singapore Airlines, Air New Zealand and Abu Dhabi-based Etihad and that with their financial clout it is able to set uncompetitively low prices to win customers from Qantas.
Under the Qantas Sale Act, dating from 1995 when the airline was privatised, foreign ownership in the national carrier is limited to 49 percent and Joyce wants that re-examined.
Hockey admitted that growth in Qantas was impeded in part by those restrictions and said it was time for a public debate about whether to ease them or whether to keep the airline in Australian hands.
"The market has changed but still the restrictions are in place," Hockey told Fairfax radio.
"It's an issue that Australians need to debate.
"And if Australians understandably say 'no, we think it should remain not only Australian-owned but Australian-controlled, and we need to have a national carrier', and I think there are many good reasons for that as well, then we've got to accept we may have to pay a price for that."
That could involve the government providing funding for Qantas, which was "a burden the taxpayers may have to pick up".
Prime Minister Tony Abbott joined the debate saying he wanted the airline to "remain an Australian icon".
"I'm happy to look at a range of measures to help ensure that happens," Abbott told reporters.
Qantas shares closed 3.8 percent up at Aus$1.23 in a flat market
The Labor opposition made clear it favours the airline remaining Australian.
"I believe the national carrier is an important part of Australia's national security, it's an important part of Australia's independence," Labor leader Bill Shorten said.
Virgin Australia is already 63 percent owned by Singapore Airlines, Air New Zealand and Abu Dhabi-based Etihad and under a recently announced capital raising plan foreign ownership could rise to 80 percent.
Joyce has claimed the overseas carriers are working to destabilise Qantas with the domestic sector, its key money spinner which has helped prop up its underperforming international network.
Virgin has called the allegations "offensive" and reportedly called the lawyers in to determine whether there were grounds to sue Joyce for defamation.