Qantas stake dubbed a dud

By KEVIN TAYLOR

Qantas could never take a stake in Air New Zealand, says an executive with Wellington airport's majority owner.

Tim Brown, of HRL Morrison & Co, the management company for listed utilities investor Infratil, said news that the airlines were discussing Qantas taking a cornerstone shareholding was a "complete mystery".

It was difficult to see the benefits for "New Zealand Inc", he said.

"We can't even begin to imagine it getting to first base. How could the Commerce Commission sanction something like that?

"Qantas is just trying to divide and rule. It's just trying to stop Air New Zealand from tying up with Virgin Blue."

Infratil's bemusement followed similar queries from business commentators and analysts over how competition watchdogs on both sides of the Tasman could approve such a move.

Any deal would also need the Government's approval as the biggest shareholder in Air New Zealand.

Air New Zealand chairman John Palmer confirmed this week that the airline had been talking to its Australian rival on a range of issues, including Qantas taking a shareholding, since May last year.

Although Infratil posted an increased net profit yesterday, it was concerned about the rate of return it was getting from Wellington International Airport, in which it has a 66 per cent stake.

Brown said the rate of return was only 3 per cent on the airport assets, when it should be 10 per cent.

Infratil was also concerned about low passenger growth.

Brown noted that the airport had little influence over what the airlines did to attract more passengers.

Infratil blames the weak growth in patronage on the relatively high cost of air travel - something an Air New Zealand/Qantas monopoly would do nothing to improve.

Brown said that while the prospect of a cornerstone stake was "extremely bad news", he welcomed Air New Zealand's plans to reshape its domestic services into a no-frills operation with lower fares.

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