Foreign ownership limits on Qantas could be eased

CANBERRA - Australia will consider easing foreign ownership limits on Qantas Airways Ltd as it looks at revamping national aviation policy.

Australian Transport Minister Warren Truss said foreign ownership limits on Qantas, the country's largest airline, were part of the government's review of aviation and should be completed in three or four months.

"Qantas has a special place in the heart of Australians. I think all Australians have an attachment to Qantas and would want to see it remain as Australian," Truss said.

However, the review will also examine efforts by rival Singapore Airlines Ltd, the world's second-biggest airline by market value, to fly the lucrative Sydney to Los Angeles air route.

"The trans-Pacific route is on the agenda, and some kind of response on that issue is possible by the end of the year," Truss said.

"The possibility of other airlines operating on the trans-Pacific route has not been ruled out."

Under laws enacted in 1992, overall foreign ownership of Qantas is limited to 49 per cent.

Single foreign investors are restricted to no more than 25 per cent, while foreign airlines are limited to a maximum 35 per cent of Qantas.

If the ownership limits in the Qantas Sale Act are scrapped, the government's Foreign Investment Review Board will still have to examine any majority foreign ownership, giving the government the power to veto any foreign takeover.

Qantas, founded in the Australian outback in 1920, was originally registered as the Queensland and Northern Territory Aerial Services Ltd.

Truss, Australia's former Agriculture Minister, was appointed Transport Minister a week ago by Prime Minister John Howard.

His predecessor, John Anderson, told his Singapore counterpart Yeo Cheow Tong in June that Australia was not yet ready to open up access to the Australia-United States route.

Qantas and bankrupt US carrier United Airlines, part of UAL Corp, are the only airlines offering direct flights from Australia to the US mainland. Discount carrier Virgin Blue also wants access to the United States.

Truss said while he supported the idea of opening the skies to competitors, the government had to balance its policy against what it sees as distorted international aviation markets and unfair government support for some airlines.

"We do have to recognise the world aviation market is anything but pure and free and fair," he said.

Howard has publicly questioned whether Qantas and Singapore Airlines might some day merge.

For its part, Qantas supports an end to foreign ownership limits.

Qantas chief executive Geoff Dixon has said he believes Qantas would have to consider an "association" with another airline in five to 10 years.

- REUTERS