The Australian Two Airlines Policy (or Two Airlines Agreement) was a policy of Australian Federal Governments from the late 1940s to the 1990s. Under the policy, only two airlines were allowed to operate flights between state capital city and major regional city airports. For most of the period of the policy, the "two airlines" were the privately owned Ansett Airlines and the government-owned Trans Australia Airlines. Though persisting for some decades, the policy finally fell into abeyance in the world-wide airline deregulations of the 1990s.
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Beginnings
The First and Second Chifley (Labor) ministries established Trans Australia Airlines in 1946, after passing legislation establishing TAA in 1945. TAA was initially intended to be a monopoly national carrier, subsuming all the routes flown by Australian National Airways and any other non-government airlines. This was successfully challenged in two High Court cases.
Formal establishment
The Two Airlines Policy was formally established in 1952 by the Fifth Menzies Ministry. The policy took practical effect when Ansett purchased the failing Australian National Airways in 1957, resulting in it being the only competitor for the government-owned TAA. While smaller regional airlines were free to operate flights between regional airports and between cities and regional centres, the policy allowed only two airlines to operate flights between major cities in Australia. This led to some bizarre measures by other airlines to get around the rules, for example East-West Airlines briefly operated between Sydney and Melbourne by performing a touch-and-go landing at Albury en route before the practice was banned.
Continuation of the "Duopoly"
The failing Australian National Airways was taken over in 1957 by Sir Reg Ansett's Ansett, during the Seventh Ministry of Prime Minister Sir Robert Menzies. Subsequent governments continued to allow TAA and Ansett to hold a duopoly over domestic flights in Australia for almost four decades until the deregulation of the industry.