DAVID KNIBB SEATTLE
A year after Air New Zealand (ANZ) had to be rescued, the make-up of Australasian aviation is again in flux as Qantas ponders buying a stake in the carrier.
Qantas Airways is already holding talks with ANZ, and now that New Zealand's incumbent government has won re-election, analysts predict this could soon become more than just talk.
Although Wellington has not committed itself to selling any of its 82% stake in ANZ to Qantas, the Labour government seems far more receptive to the idea than its National Party opposition. The matter became a major issue in last month's general election.
National candidates claimed ANZ and Qantas already had "a done deal" for the Australian carrier to take a 20-25% stake, and were simply waiting until after the election to sign it. But ANZ and Wellington issued denials, although officials were forced to disclose that Qantas has recently held meetings with ANZ and its lawyers, and with New Zealand's competition enforcer, the Commerce Commission.
ANZ's recent request to investment bankers for an independent valuation of the company, and comments by Qantas chair Margaret Jackson about a "partnership of equals" with ANZ are fuelling speculation of an imminent deal.
Finance minister Michael Cullen says New Zealand's government would not change laws to facilitate it, meaning Qantas, as a foreign airline, could only buy up to 25%, and the Commerce Commission could quash the deal under rules preventing a company owning more than 15% of a competitor, or having directors on both boards.
The Commission also views control of more than 40% of a market by two connected companies as anti-competitive, although it can waive these caps when it is deemed to be in the national interest.
Together, Qantas and ANZ control 80% of the New Zealand domestic and trans-Tasman market, well over the Commission's threshold. Some have suggested that avoiding another taxpayer bail-out to keep ANZ alive in a bloody showdown with Qantas might indeed be in the national interest. But selling a stake to another Star Alliance carrier would bring the same benefit without anti-competitive effects.
The possible tie-up has received the backing of the Engineering, Printing and Manufacturing Union (EPMU), which represents around 3,000 ANZ workers. "The New Zealand aviation market just isn't big enough to sustain two major providers," says EPMU national secretary Andrew Little.
The situation may have parallels with Air Canada's take-over battle three years ago, when Lufthansa and United stepped in to help their partner.
Other carriers, meanwhile, are worried at the prospect of a Qantas-ANZ tie-up. Virgin Blue, which competes with Qantas in Australia and hopes to launch flights to and within New Zealand, is urging the Commerce Commission not to approve the deal. It would reduce competition and bring higher fares, says David Huttner, Virgin Blue's head of commercial operations. if the move does go ahead however, Virgin argues ANZ should be forced to sell Freedom Air, its discount unit that flies between New Zealand and Australia.
A link between Qantas and ANZ, with the spectre of ANZ pulling out of the Star Alliance, may also explain the renewed interest of Singapore Airlines (SIA) in domestic Australian routes. Sydney airport says the airline has inquired about space in Ansett's former domestic terminal, which is set to re-open in September.
Analysts predict that the carrier will launch in Australia this year. Until the Qantas-ANZ issue is resolved, SIA is likely to keep its options open.
Source: Airline Business
