At long last. Air New Zealand's two-year odyssey to win approval for its bid to take a 50 per cent stake in Australia's Ansett finally came to a successful end in early June, at the same time as the prospect for the rebirth of the single trans-Tasman aviation market brightened.
The approval by New Zealand's Commerce Commission means official completion of the deal is expected by the beginning of July. This opens the way for Air NZ to introduce sweeping measures which will see the partners blend all aspects of their operations in Australasia and the Asian region. Under the structure of the agreement Air NZ will take a lesser, as yet unspecified, share of Ansett International, which serves several Asian destinations, to avoid impinging on sovereignty clauses in Australia's bilateral deals.
Only days before the NZCC ruling, there was further progress in trans-Tasman air transport relations when Australian transport minister John Sharp signalled talks between Canberra and Auckland would start in July, aimed at finalising a single Australasian aviation market by November. A previous single-market agreement was abandoned days before its implementation in 1994 by the former Australian Labor government in the run-up to flotation of Qantas.
News of the single market revival was tempered by a decision that talks on further Australian beyond rights for Air NZ would be separated from the negotiations and dealt with at a later stage. The Auckland flag desperately wants to extend its fifth freedom services through Australia to Asian ports as the planned launch of flights to China later this year will see it using up all its current rights. Qantas is fighting to prevent any increase in Air NZ's rights.
Air NZ also needs approval for increased codesharing services to enable it to properly take advantage of the impending tie-up with Ansett. The airline's managing director, Jim McCrea, says codesharing with Ansett on services from Australia to Asia will be a key element of their alliance.
Australia's Foreign Investment Review Board must still approve the link up with Ansett and is expected to do so soon. The two carriers will cooperate across a broad spectrum, including marketing, maintenance and joint-purchasing. Air NZ's trans-Tasman services will link the two airlines' domestic networks. McCrea says the aim is to give birth to an 'Australasian airline system' in which the separate carriers will retain their brands. Rationalisation promises million of dollars in savings.
The NZCC earlier this year rejected Air NZ's application for clearance to buy TNT's 50 per cent of Ansett because it would have given the Kiwi carrier a share of its only domestic rival, Ansett New Zealand, creating a dominant position in the market.
That obstacle has been removed under an arrangement in which the other Ansett owner, News Corp, will acquire 100 per cent of Ansett NZ. The NZCC deemed this an acceptable solution because it saw no possibility of Air NZ exercising control over its domestic rival despite the links with News Corp through Ansett Australia.
Neither side has disclosed how much Air NZ will pay TNT for its holding in Ansett, but it is understood to be around A$300 million (US$240 million). Part of the deal involves a capital injection by Air NZ which will be used to restructure Ansett's fleet.
Tom Ballantyne
Source: Airline Business
