Airline proposal flying into flak

By SIMON COLLINS

Parties to the left and right of Labour are united in opposing any sale of a stake in Air New Zealand to traditional rival Qantas.

Act, National, United Future, the Greens and the Alliance spoke out yesterday against giving Qantas a "cornerstone shareholding" in the national carrier.

Ironically, Labour's only potential supporters are Progressive Coalition leader Jim Anderton, who left Labour in protest at the sale of the Bank of New Zealand in 1989, and New Zealand First leader Winston Peters, who quit the National Cabinet over the sale of Wellington Airport in 1998.

On current polling, these two parties would be enough to give Labour majority support.

A spokeswoman for Finance Minister Michael Cullen said Air NZ directors and Qantas were in discussions about a deal, which would be considered by the incoming Government if requested by the Air NZ board.

"A Labour-led Government would retain Air New Zealand in majority public ownership for the foreseeable future but they have never ruled out the sale of a cornerstone shareholding to another airline.

"They have never ruled out Qantas in that connection," she said.

A cornerstone shareholding would not be more than 24.9 per cent, which is the maximum allowed to any foreign shareholder to safeguard the airline's international landing rights.

The Government bought 82 per cent of the airline for $885 million last October.

NZ First's transport policy says it is "opposed to Qantas having an ownership interest in our airline".

But asked about the proposal to sell up to 24.9 per cent to Qantas, Mr Peters said: "If it made sense in terms of synergies, and after having looked at the facts, we would consider it."

He said the remaining shares should be kept in NZ hands.

He had no objection to Qantas taking a management contract.

The Progressive Coalition's transport policy says public transport assets "will be held in public ownership where feasible".

Mr Anderton supports keeping a majority public stake in Air NZ "as long as we are in the Government".

"Anything else surrounding that, apart from that principle which is absolutely rock solid, will be looked at on the merits of the commercial case put for any other initiative that may secure a strong future for the airline."

National Party leader Bill English said National would have been happy to sell 49 per cent of the airline to Singapore Airlines when that was proposed last year, but would oppose giving a significant stake to Qantas because it would reduce competition.

"We saw how Qantas behaved around the whole debacle with Ansett and Air NZ. Those guys are out for Qantas, not for New Zealand's interests."

He said National had not considered whether the Government should keep a majority holding in Air New Zealand.

Act leader Richard Prebble, who was sacked from David Lange's Labour Cabinet in 1988 a month before the Cabinet sold 19.9 per cent of Air NZ to Qantas, said the Government should sell its current stake in the airline, but not to Qantas.

"If Qantas takes control of Air New Zealand we are going back to a monopoly aviation system.

"On the Tasman we are going to see Qantas and Air New Zealand increasing their airfares.

"This is a huge step backwards."

United Future leader Peter Dunne agreed that the Government should sell its Air New Zealand shares as soon as possible.

But on a sale to Qantas, he said: "I wouldn't rule it out completely, but I don't think it's in New Zealand's strategic interests at this moment."

Greens co-leader Rod Donald said the Greens opposed all foreign shareholding in the national airline, but were not opposed to private New Zealand investors such as tourism companies investing in it.

Alliance leader Laila Harre said the Alliance opposed selling any of the Government's shares.

Mr Donald and Ms Harre said they would not make Air NZ a confidence issue on which they would bring down a Labour Government.

A competition law expert with lawyers Simpson Grierson, Peter Hinton, said any Qantas stake in Air New Zealand could be ruled illegal under the Commerce Act if it resulted in "a substantial lessening of competition".

He said the Government could override the commission by declaring that the deal was important for the national interest.

What the parties say about Air NZ

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