Labor's decision to sell Qantas split the party as acrimonious debate raged over whether the iconic Flying Kangaroo should remain in public hands.
But privatisation went ahead after the party settled on the Qantas Sale Act in 1992, which limited foreign ownership to 49 per cent and kept its headquarters and key operations on Australian soil.
The act also means a foreign investor is limited to a 25 per cent stake and foreign airlines can hold no more than 35 per cent.
Even today, opinion polls show majority support for Qantas remaining in majority Australian hands.
The core argument has been that an island continent needs its own national carrier for economic, social and national security reasons.
For well over a decade, Qantas has been arguing that foreign ownership restrictions hamper its ability to compete, particularly in its bitter domestic rivalry with Virgin.
As far back as 2002, then Qantas chief Geoff Dixon wanted foreign investment limits to be removed to allow the airline to be globally competitive.
The limits imposed an artificial ceiling on the Qantas share price that increased its cost of capital, making it difficult to compete on a level playing field.
The tipping point came in December, when Virgin's foreign shareholders - Singapore Airlines, Etihad and Air New Zealand - took their stake to almost 70 per cent as part of a $351 million capital raising.
Qantas then began stepping up its lobbying of the government to give it a free hand to talk to its own potential foreign investors.
Prime Minister Tony Abbott is now considering allowing majority foreign ownership of Qantas, after it posted its worst loss since privatisation.
Qantas will shed 5000 jobs, freeze wages, retire old planes, slash capital spending and cut some routes in a bid to cut $2 billion in costs over three years.
But it insists even these internal changes will not ensure its long-term survival, and what it needs are cashed-up foreign partners that could put a new spark of life into the venerable airline.
However, there is no guarantee this will return it to profitability.
Chief executive Alan Joyce can offer no forward profit guidance, but warns of "challenging and volatile" conditions ahead.
Labor has also been quick to point out that changing the act would have other ramifications: thousands of jobs could go offshore and unprofitable regional and rural routes would be dropped.
As it considers the future of Qantas, the government faces a political challenge that's perhaps just as difficult as Labor's step into the unknown more than two decades ago.
