Pascoe: Qantas and Air NZ ... time to get domestic
25 November 2002 9:00:00 AM
After a long courtship, it looks like Qantas and Air New Zealand are about to have another go at living together, but the relationship is not without problems.
For a start, it's the second time round for this couple — the first attempt ended badly with Qantas walking out in 1997 after being taken for granted by its Kiwi spouse. That was when Air New Zealand management had attitude — before it totally embarrassed itself and bankrupted the airline, requiring a bail-out by the New Zealand government.
Qantas felt Air New Zealand never listened to it the first time — it won't be getting back into bed unless it has a large say in how the household spends the money and where it goes on Saturday nights for fun. In short, Qantas will want something close to a 50 percent say for its 22.5 to 25 percent stake.
Presuming that the pair have satisfied themselves on that front, there's then a little matter of Kiwi national pride and the chup on the shoulder about Big Brother Australia. Politically, most nations link national pride and their flag carrier — something that can lead to irrational investment decisions.
What carrots the airlines might have to get over the Kiwi politics will be interesting. One NZ newspaper is suggesting Qantas will move some of its engineering work to NZ, thus saving some money on cheaper Kiwi workers and creating a few jobs on that side of the Tasman. But you can imagine how well that will go down with the local unions?
But moving along, if all the Kiwi angles are covered, there's still Allan Fels' ACCC to keep happy. Virgin Blue is already agitating about the Qantas/BA joint services agreement on the kangaroo route, saying it will oppose its renewal when it expires early next year.
Virgin Blue is being quoted this morning as saying it will review its plans to fly across the Tasman if the Qantas/Air New Zealand deal goes ahead, but I suspect New Zealand wasn't high on its list of targets anyway.
In any event, Qantas is unlikely to get anything like the BA joint services agreement ticked by the ACCC.
And then there are the "relos" — this would be a mixed defactoship, as Qantas is a One World member while Air New Zealand is a Star Alliance airline.
The Kiwi press is suggesting Singapore Airlines might buy BA's 17 percent stake in Qantas and the flying kangaroo would then move into the Star Alliance family and live happily ever after — but that sounds like more hope that the Kiwi tail might wag the Australian dog.
Indeed, it might be easier to keep the ACCC happy if the two airlines remained in different alliances, but that in turn would require a lack of pillow talk.
Thus it's easy to see why it's taken so long for these two to get to any sort of announcement stage — and it might yet prove to be less than easy to live together