Doubts grow on Virgin's sincerity

By VERNON SMALL deputy political editor

The Government is growing increasingly sceptical that Virgin Blue is serious about flying in New Zealand, as frustration mounts over dealings with the cut-price operator.

Officials have asked for a formal proposal from the Australian-based airline, but have yet to see one.

Meanwhile, Transport Minister Mark Gosche has criticised Virgin Blue for its public response to talks held in Wellington on Monday.

Mr Gosche said he had been asked to treat Virgin Blue as a New Zealand or Australian company under the single Australasian market, opening the way for it to operate on the transtasman route.

"And we are. But you then saw what happened afterwards and you really have to start asking them questions, rather than me, about their intentions," he told the Herald.

He said he was cautious debating the issue of Virgin through the media. "That is the way they have chosen to do it. That is not the way I operate."

But he stressed that Virgin Blue's access to the transtasman market did not hinge on an increase in Air New Zealand's seven weekly flights from Los Angeles to London. He was annoyed that Virgin Blue representatives had highlighted that issue after the talks.

He said he had outlined to chief executive Brett Godfrey three ways to operate across the Tasman.

"They can change their ownership structure, they can get an exemption from both Governments, or we can get, as a nation, different rights which will allow them to do it."

He had only suggested looking at all the options.

"But people chose to interpret what I said in their own way."

Virgin Blue's owner, British entrepreneur Sir Richard Branson, has since flagged a possible selldown within two years of half his 100 per cent stake, bringing it within the ownership criteria.

Mr Gosche said on Monday that Mr Godfrey had ruled out a float within four or five years.

"They didn't ask us for those other things. When you get into outlining options to them, they leaped on one of the options and said it was ridiculous to expect that the British would give any rights.

"The other way, that they prefer, is for us to designate them as if they were an Australian or New Zealand airline and that is what we are considering."

A fax had been sent confirming that, but no reply had been received.

Beehive sources yesterday questioned whether the airline's recent media blitz would have any concrete outcome. The airline was now preoccupied in Australia, after Qantas' takeover of rival cut-price airline Impulse.

Virgin Blue's head of commercial operations, David Huttner, said yesterday that the Impulse issue had been a distraction, but a formal proposal would be sent by the end of next week.

In reply, Virgin Blue wanted "a very unambiguous statement from them that they do not consider Richard's [Branson] passport to be a factor."

Mr Huttner said Virgin Blue would seek a quick response to its formal plan.

He said the proposal would be as detailed as that given to the Australian Government before Virgin Blue started operating there.

Government sources yesterday were also questioning if Virgin Blue planned to employ mostly Australian crew with a limited number of ground-based jobs in New Zealand and possible loss of tax revenue.

Mr Huttner said New Zealand pilots and cabin crew would be hired.

Virgin Blue was still serious about flying to and within New Zealand, hopefully before Christmas.

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