Qantas, Air NZ eye island routes
Fri "The Australian"
Qantas, Air NZ eye island routes
By Steve Creedy and Claire Harvey
June 11, 2004
QANTAS and Air New Zealand indicated yesterday that they would consider any proposal to take over Pacific routes from struggling island nations.
Treasurer Peter Costello yesterday urged small Pacific nations to privatise or merge their state-owned airlines and subsidise major carriers such as Qantas and Air New Zealand to take over island routes.
Mr Costello was delivering the preliminary findings of an Australian-funded study of Pacific transport due to be finished next month. Air New Zealand and Qantas reacted cautiously to the proposal but neither rejected it out of hand.
Qantas, which already owns 46 per cent of successful Fiji-based airline Air Pacific, said it had worked for many years with several airlines in the Pacific and offered a broad range of assistance.
"We would be prepared to look at further ventures that benefit both parties, particularly given the difficult circumstances many of these airlines are facing," Qantas chief executive Geoff Dixon said.
Air New Zealand said: "Air New Zealand would be prepared to discuss such a proposal but, due to the complexities surrounding the matter, any action would require robust discussion and analysis."
Mr Costello said expensive, unprofitable airlines were sapping valuable resources that should be spent on developing the struggling island economies.
He told a meeting of finance ministers in Rotorua, New Zealand, that many islands took national pride in owning a flag carrier, but only a few of the 20 flying could be profitable.
Any subsidy offered by the islands should be publicly advertised so airlines could compete for the business, Mr Costello said.
"If some other airline says I could make a profit with a lower subsidy than that, you make it contestable. But if you own the airline, you're not quite sure how much subsidy you're paying, you're not quite sure who's capturing it and you're not quite sure you're getting best value for money."
The importance of tourism made efficient transport essential to save Pacific nations from economic failure, the ministers said in a joint statement at the meeting.
They agreed to consider the Australian study's finding that some airlines must close, and to examine the prospect of offering subsidies to major international carriers willing to fly the routes.
But Samoan Finance Minister Misa Telefoni said he was concerned that if Samoa privatised its carrier, Polynesian Airlines, unscrupulous buyers could refuse to fly unprofitable routes or simply strip the airline's assets.
Tonga, whose national carrier, Royal Tongan, went into liquidation last month, had had no domestic flights for three weeks, Tongan Finance Minister Siosiua 'Utoikamanu said.
The UN Development Program endorsed Mr Costello's plan and said Pacific countries would simply have to accept that some airlines must go.
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