Pact plan safe, says Qantas

By CHRIS DANIELS aviation writer

Plans for a marriage with Air NZ have not been put at risk by Qantas' new scheme to set up a low-cost Asian airline, says chief executive Geoff Dixon.

Qantas is investing S$50 million ($45.8 million) into the new Singapore-based airline. Qantas will own 49.9 per cent, with the rest being owned by Singapore Government investment company Temasek and two Singapore businessmen.

Announcing the deal yesterday, Dixon denied it signified a shift away from its focus on forming an alliance with Air NZ.

"This has no effect on our relationship with Air NZ, in fact I rang Ralph Norris ... about two hours ago to tell him of the announcement and I had spoken to him in Australia only a week ago," he said. "He knows and we are still appealing to the various authorities in Australia and New Zealand on that particular issue and we are looking still to go forward if possible with some venture with Air NZ."

Dixon said he was "more confident than ever" that the whole aviation industry would "totally change within the next 12 or 18 months - a maximum of two years, obviously the number of low-cost carriers coming into Asia if not other parts of the world will continue".

The need for consolidation among the major "legacy airlines" would accelerate as these markets opened up.

"You just cannot continue to have the number of airlines that are out there."

Qantas is in the final stages of establishing its own low-cost airline in Australia, named Jetstar, which will compete with Virgin Blue.

Qantas and Air NZ were last year denied permission by competition regulators to set up an anti-competitive alliance.

The Australian carrier wants to take a 22.5 per cent stake in Air NZ and integrate services operating to, from or within New Zealand.

An appeal by the airlines to the Australian federal competition tribunal will be heard next month. Air NZ will later take its own appeal to the High Court.