Extracts from Fri "Australian Financial Review"
Qantas becomes Star attraction
Jane Boyle
The Star Alliance airlines are considering a radical proposal to woo Qantas Airways away from the rival oneworld alliance - an alternative to the formidable option of launching a new airline to fill the gap left by Ansett's collapse.
The proposal was discussed by Star members during a gathering
in Shanghai before the recent meeting of airline chiefs for the
IATA meeting.
While Star's overtures to Qantas are at a preliminary stage, the
proposition could have major ramifications for Qantas's existing
airline relationships, including its 21.4% shareholder and fellow
Oneworld member British Airways.
One proposal raised by Star members was for a group of them
to invest in Air New Zealand to fund a launch of a domestic
operation in Australia. However, taking on Qantas and Virgin
Blue in the Australian market is a daunting prospect.
Singapore has turned down numerous opportunities and offers
of government assistance over the past eight months to build
a new carrier from Ansett's remains. It would be a bold move
to do so now that Qantas has had a headstart in adding new
capacity and establishing a strangle-hold on the loyalty market,
and Virgin Blue has won a cashed-up half owner in Patrick Corp.
Virgin Blue is more vulnerable than Qantas to a new entrant.
Unlike Qantas which invested heavily to expand its fleet and
infrastructure as soon as Ansett collapsed, Virgin Blue has taken
gradual steps to expand in order to maximise profits. A new
entrant could jeopardise Richard Branson's hopes of floating the
carrier in the short term to realise his 50% stake.
Joining with Singapore Airlines and Air New Zealand within Star
could hold appeal for Qantas, although there would be hurdles
to overcome, not least the threat to its realationships with BA
and American Airlines which are also part of Oneworld.
However, Qantas has focused increasingly on bilateral relationships, which offer more flexibility than multilateral alliances
like Oneworld and Star.
If they could reconcile their ambitions, Qantas, Singapore and
Air New Zealand would represent a powerful alliance.
Qantas is the most attractive partner for Star, but a defection
will be fiercely resisted by Qantas's Oneworld partners.
Last edited by Wirraway; 7th Jun 2002 at 02:55.