Oz govt wades into airline row

Qantas boss Alan Joyce is calling for urgent action.

Australian Federal Treasurer Joe Hockey has flagged the possible ditching of laws to allow foreign ownership of national flag-carrier Qantas.

Hockey says the alternative would be an injection of Government cash to keep the airline flying as key rival Virgin Australia raises A$350 million from its big foreign stakeholders, Air New Zealand, Etihad and Singapore Airlines.

But the possibility of opening Qantas to foreign ownership has struck a raw nerve, raising widespread opposition and rejection by Labor of the scrapping of the Qantas Sale Act.

The act requires Qantas to be at least 51 per cent owned by Australian interests. The airline is wholly owned by private investors.

Qantas has been infuriated by Virgin's capital raising, urging federal and state governments to block the injection of foreign cash.

Air New Zealand owns nearly 23 per cent of Virgin Australia and said this month that it would spend up to $130 million maintaining its stake as part of a planned A$350 million capital raising.

Qantas chief executive Alan Joyce said his airline would not be able to compete on the same terms as Virgin if its rival received the capital "and doesn't care about losing money".

Joyce said the Government should review if Virgin should still be able to access traffic rights reserved for Australian airlines, and said there was no time to argue the case through Parliament. "We need urgent, immediate action on this," he said.

Virgin Australia chairman Neil Chatfield described the Qantas claims as "absurd".

Hockey said his preferred option was the removal of all shareholding restrictions, despite the fact that this meant Australia would no longer have a national carrier.

If Australians demanded that Qantas remain Australian-owned then "we've got to accept we may have to pay a price for that", with the Government likely to have to inject money into the airline.

Labor, while opposing the scrapping of the act and foreign ownership of Qantas, would not oppose a small Government shareholding.