Ignoring recent losses and the imminent purchase of 50 per cent of its stock by Air New Zealand, Ansett Australia has decided to push ahead with plans to expand its embryonic international operations in Asia.

Managing director Graeme McMahon says a third Boeing 747-300 will be leased for flights to Malaysia and Taiwan from November, joining Japan, Hong Kong and Indonesia on the carrier's regional network. Ansett had hoped to link Sydney with Kuala Lumpur through a codeshare with Malaysia Airlines but now has had to take the more costly step of going it alone following Malaysia's decision to team up with Virgin Atlantic on the route.

McMahon refuses to make any comment on the Air NZ situation, describing it as a shareholder matter, but there have been persistent reports that Ansett's international operations face downgrading or elimination once the Auckland-based flag completes its purchase. Air NZ already holds extensive fifth freedom rights through Australia to numerous Asian destinations, including Taiwan, Hong Kong, Japan, Thailand, Korea and the US, while joint international services are certain to be included for consideration.

In mid June, negotiations were continuing on the Auckland-based carrier's A$550 million (US$394 million) buyout of News Corp's 50 per cent share of Ansett. They apparently hinge on assurances that Air NZ will eventually be able to purchase the other half from co-owner TNT.

Various policy issues concerning the future make-up of the trans-Tasman aviation market lie at the heart of talks; Air NZ is understood to be seeking an undertaking that Canberra is committed to a common equity market for trans-Tasman airlines.

The talks have led to the resignation from Air NZ's board of Qantas chairman Gary Pemberton and chief executive James Strong. Qantas holds a 19.9 per cent stake in Air NZ, but Strong says the negotiations with Ansett have made their presence at board meetings untenable. Qantas has nominated two independent Australian directors in their place.

Strong has stressed the resignations are not related to this month's Qantas float, nor that the sale of Qantas' shares in Air NZ is under active consideration.

An Air NZ investment may take longer than expected to produce dividends as domestic market conditions in Australia slow. Ansett lost A$8 million (US$5.7 million) pretax in the third quarter to 31 March, mostly the result of a market share battle with Qantas and its costly international venture.

Meanwhile, both Qantas and Air NZ are facing new trans-Tasman competition with moves by a New Zealand air charter company to introduce scheduled services from August.

Kiwi Travel Air Charters began charter flights between New Zealand provincial centres and five Queensland cities earlier this year, using a Boeing 737 leased from Air Nauru. They have been so successful that the company has announced five weekly scheduled flights, from Hamilton in New Zealand to Sydney and Brisbane and from Dunedin to Brisbane, using a B737-300 wet-leased from National Jet Systems.

A licence is expected to be approved by both governments as they seek to encourage competition on routes between the two countries.

Source: Airline Business