The shakeup of Australia's aviation sector following Air New Zealand's successful acquisition of Ansett is likely to have more of an impact outside the country than within. ANZ's swoop to appoint Cathay Pacific managing director Rod Eddington to head Ansett is a rare managerial coup in the region. Eddington will take over as executive chairman of Ansett Australia in January and is being replaced by Cathay's strategy chief, David Turnbull. Eddington's arrival will be preceded in November by the launch of the long-awaited trans-Tasman single aviation market. However, Qantas group executive general manager commercial Geoff Dixon says competition is already so high neither the Ansett-ANZ union nor the single market will lead to a fare or capacity war. 'If the discounting continues, even at the rate it is going now, both airlines will be damaged,' he says. 'ANZ won't fly domestically in Australia now it has 50 per cent of Ansett and Qantas won't launch a domestic operation in New Zealand.' Dixon's view runs contrary to the prediction of Australian transport minister John Sharp that the single market will bring lower ticket prices next year. Analysts tend to share Dixon's view. 'We have just had one New Zealand carrier, Kiwi International, fold,' notes one Sydney analyst. 'There are still doubts about a proposed new Australian operator, Aussie Connections, which is embroiled in legal battles with Qantas. That means there are unlikely to be any early new entrants.' The chief executive of Australia's Tourism Task Force, Chris Brown, also doubts prices will fall, although he says there may be long-term advantages. ANZ sealed its agreement to acquire 50 per cent of Ansett Australia from TNT for A$325 million ($255 million) on 2 October. News Corp retains its 50 per cent stake. To meet bilateral requirements Ansett is selling a 51 per cent stake in Ansett International to International Airline Investments Holdings, a holding company controlled by AMP and County NatWest Australia. News Corp has also acquired the remaining 50 per cent in Ansett New Zealand. ANZ plans to inject A$150 million into Ansett with News adding a further A$50 million. Peter Negline, airline analyst with Salomon Brothers in Hong Kong, believes Rod Eddington will spend most of his first year consolidating the partnership with ANZ and installing fiscal discipline. Eddington's arrival is a coup for the airline, which has suffered from poor morale and performance during two years of ownership uncertainty. His departure from Cathay, where he has been since 1979, was a surprise though he has family reasons for returning. Meanwhile, the New Zealand Commerce Ministry says it is considering an investigation into September's collapse of Kiwi International with debts of $12 million. Tom Ballantyne
Source: Airline Business
