The future of Air New Zealand's bid to take a 50 per cent stake in Ansett Australia could hinge on the outcome of the finely balanced Australian federal election scheduled to be held before March. Victory for the opposition Liberal Party will see a swift resumption of policy to complete the trans-Tasman aviation market, removing the major obstacles to Air NZ, as a 'foreign' carrier, holding 50 per cent of an Australian airline.
But if Labour remains in power open skies with New Zealand will probably remain off the agenda for some time, and the Kiwi flag will almost certainly face restrictions on the size of stake it can take in Ansett.
In the wake of November's 'in-principle' deal reached between Air NZ and TNT, 50 per cent owner of Ansett, rival Qantas has already started lobbying Canberra to limit Air NZ's stake to 25 per cent: the same maximum share British Airways was allowed to take in Qantas under foreign ownership rules.
The Auckland-based carrier will initially purchase 25 per cent of TNT's stake for A$200 million (US$148 million) and holds an option to buy the remaining 25 per cent for a fixed price of A$225 million in 1998. Under present circumstances that would raise questions over Ansett's designation as an Australian airline, which could see it lose its international route authorities.
If, however, a trans-Tasman market is in place the fate of Air NZ's 50 per cent holding would be bound up in the wider shakeout of bilateral agreements, depending on how the single market grouping intends to approach relationships with trading partners in Asia and elsewhere.
The deal has brought some relief to Ansett staff - morale had plumetted amid the uncertainty over future owners - but there is still a long way to go before the deal is finalised.
The agreement is currently in the form of a memorandum of understanding and it will probably be March before regulatory approval is obtained. The merger is strongly favoured by the Australian government, but New Zealand's Commerce Commission has serious doubts about the position of Ansett New Zealand, the Australian carrier's domestic operation in New Zealand.
The watchdog body is concerned that Ansett NZ is Air NZ's only domestic competitor and it does not want to see a monopoly return. Air NZ chief executive Jim McCrea has suggested the Ansett NZ operation will be 'ring-fenced' to enable it to operate independently and continue competing domestically.
But analysts suggest the best solution is to sell Ansett NZ off - the carrier has moved into profit for the first time after six years of high losses - to avoid the ludicrous situation of Air NZ competing against a carrier whose parent it half owns. Qantas is also likely to sell off its 20 per cent investment in Air NZ.
Tom Ballantyne
Source: Airline Business
