Originally Posted by AAaLot
Why doesn't this work in a free enterprise mode?
There are attempts to do this.
For example, within the EU, any EU airline can operate any route between any two EU points without having to apply for a route authority, as the old bilateral system has been completely broken down between EU countries and replaced by intra-EU open skies. Then it's just a matter of pure business arrangements.
Similarly, I believe that Australia and New Zealand have a unified aviation market.
Originally Posted by AAaLot
Is that why airlines like Qantas profitable [government protection]?
There's no doubt that some airlines benefit from protection by their own governments, and Qantas is the subject of some suspicion because of the profits which it makes on one particular route (SYD-LAX).
But QF is also an example of the multi-factorial reasons behind a successful airline's success. It actually has good products, which some people are prepared to pay more money for. It holds its own against international competition on just about all of its international routes. Its main domestic competitor mismanaged itself into oblivion in a free enterprise world (compare the walking dead of the US airlines which have languished in Chapter 11, hurting their more successful competitors during the process). It has developed a bold (and apparently successful - so far) strategy for dealing with the main competitor that has since emerged. It has a strong national franchise. And even on that single route on which it makes so much money, it has actual, future and potential competitors (UA, AC and NZ) - yet continues to hold it own in some style.
So it's not just government protection which makes QF profitable, even if the suspicions have any substance to them.