Qantas blames over-supply of cheap flights

QANTAS chief executive Alan Joyce has blamed foreign government-backed airlines creating an over-supply of cheap flights in Australia for its current predicament.

Mr Joyce fronted a Senate inquiry into the ailing airline's fortunes in Sydney on Friday, saying the removal of foreign ownership restrictions would help bring the national carrier back.

He told the inquiry that although removing the Qantas Sale Act's provision that prevents majority foreign ownership would help, the airline would still need to sack 5000 staff.

Under heated questioning, Mr Joyce said the key problem was an uneven playing field in the domestic market created by Virgin Australia and Tiger Airways' entrance to the market.

He said both airlines were backed by foreign governments which were willing to pay for the carriers to lose money in the market by offering cut-price flights to consumers.

This situation, he said, eroding Qantas' ability to compete was a key issue which could possibly be overcome by removing the ownership restrictions.

Of the $2 billion in cost-cutting the company is undertaking, he said only 25% of those cuts could be met with lay-offs, with the remaining 75% in fleet simplification, fuel cost cuts and other efficiencies.

But an airline industry consultant, Ian Thomas from CAPA Consulting, told the inquiry the need to cut 5000 staff was an "illogical progression" and something the company should have been aware of years ago.

Mr Joyce said the national carrier's management took responsibility for "turning the business around", and making the "tough decisions" despite the "uneven playing field".

The Senate committee will report its findings to parliament later this month.