KEY POINTS:
A threat by Qantas to axe New Zealand flights if new legislation is passed in Australia took the local aviation sector by surprise yesterday.
But the threat appears to be political game playing and travellers fearing an Air New Zealand monopoly can relax, at least for the time being, says a local aviation analyst.
Qantas general counsel Brett Johnson said yesterday that if the Qantas Sale (Keep Jetstar Australia) Amendment Bill, designed to protect the company's subsidiary Jetstar from foreign takeover, was passed the airline would have to stop Jetstar operations in New Zealand and the Pacific.
The bill stipulates that Jetstar operations should be based in Australia, eliminating the possibility of continuing with New Zealand and other Pacific operations.
Johnson made his comments at the opening of a Senate inquiry into how the airline's proposed sale would affect Jetstar.
Goldman Sachs aviation analyst Marcus Curley said he would be "flabbergasted" if the Senate did not realise that the bill was inappropriate and change it so that Qantas could continue operating outside Australia.
"They are trying to make sure that Australian Jetstar operations remain Australian-owned ... but the way in which the initial draft of the legislation was put forward, they hadn't made any consideration to ensure that the Jetstar operations in New Zealand are unaffected," he said.
A Qantas spokesman told the Business Herald that Johnson was giving an example of the unintended consequences of the bill.
"New Zealand is a critical part of Qantas' network and Qantas has no intention of ceasing its New Zealand operation," he said, after headlines in a Sydney paper sparked concern in New Zealand.
Shares in Qantas fell to a three-month low of A$5.09 yesterday on concern the A$11.1 billion private equity buyout will be blocked by shareholders seeking a higher price.
The A$5.60 per share offer, which includes a special dividend of 15c, closes on April 3.
