Air travel guide: What happens now

If Ansett is sold to Qantas, what will happen to airfares in Australia?

The only way is up as Qantas, and possibly Virgin Blue, moves in on Ansett's 39 per cent market share. Australia's consumer watchdog acknowledges that competition laws might need to be strengthened to protect consumers.

What will happen to airfares for trips across the Tasman?

Probably nothing. Margins on the Tasman are so tight that none of the existing airlines could afford to put their prices up.

With Air NZ in trouble, what will happen to airfares within NZ?

Air New Zealand will be tempted to recoup some of its Ansett losses by raising its fares, but will be constrained by existing competition from Qantas (which will be in a better position to attack Air New Zealand on its home turf) and Origin Pacific.

What happens to my Ansett air points? Will I still be able to use them on Air NZ or use Air NZ points on Ansett? If so, for how long?

Ansett and Air New Zealand say they do not know those answers yet. Transferability of air points is sure to be considered as part of the Qantas deal, because of the large financial liability the accumulated points represent. The best solution for Ansett's 2.5 million frequent flyers would be if Qantas picked up the points, as it is the only airline flying within Australia offering a comparable service. Ansett points can still be used on other Star Alliance airlines (including Singapore Airlines, Air New Zealand and United Airlines), although how long that will continue is unclear.

Why can't Air New Zealand fly within Australia?

There is nothing legally to stop Air New Zealand doing that. Until now, it did not make business sense, as Air New Zealand had its 100 per cent owned subsidiary, Ansett, servicing the Australian market. But Air NZ has enough problems at home without starting from scratch in an Australian market dominated by Qantas.

Does the Government have a stake in Air NZ? What control does it have over what Air NZ does?

The Government has no financial stake, but it does have a Kiwi share, which gives it the power to control the size of foreign shareholdings and the makeup of the board.

Can Australia's competition watchdog veto an Ansett-Qantas deal?

Yes, but it is under pressure from the Australian Government not to do so.

What does Singapore Airlines want to happen now?

Singapore will want to see its investment in Air New Zealand protected. An increase in its 25 per cent stake is part of a recapitalisation package for Air New Zealand, and the company is also expected to support any rights issue as part of that plan. Longer term, Singapore might be interested in starting an airline from scratch in Australia but for now its focus will be on Air New Zealand.

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