KEY POINTS:
Relations between the Government and Air New Zealand have nose-dived again.
The Government sent a counter-complaint to Air New Zealand after the airline accused it of using "confidential" information about a flight to the Solomon Islands given to it for political purposes.
Prime Minister Helen Clark rejects the allegation and described a letter this week from airline chairman John Palmer as "strange" and "absurd".
Mr Palmer declined to comment yesterday.
The row is further fallout from the charter flights for Iraq-bound Australian troops undertaken by Air New Zealand.
The airline told the Ministry of Foreign Affairs but not the Government, which then condemned both. In the ensuing outrage by ministers over the airline making money from a war Labour opposed, Australian Foreign Minister Alexander Downer announced that the Australian Defence Force "will no longer use Air New Zealand under any circumstances".
But the day after Mr Downer made that comment, August 17, Air New Zealand ferried more Australian troops - to Honiara in the Solomons - an irony that Helen Clark mentioned several days later.
"Perhaps things don't get actioned very quickly in Australia," she said at the time.
Mr Palmer sent a letter to several ministers, including shareholding minister and Finance Minister Michael Cullen, about the use of the Honiara flight information.
"I saw the information used in an overtly political context which could have commercial consequences for our business," Mr Palmer's letter said.
Mr Palmer appeared to be referring to the news that Australia has set up a new hurdle for Air New Zealand tenders - all of its future defence tenders will have to be referred to the Australian Defence Force head of procurement.
The airline has valuable contracts with ADF.
Its wholly owned subsidiary, Tasman Aviation Enterprises, based in Australia is a key contractor to the RAAF Base Amberley. It also paints ADF aircraft at Richmond.
Helen Clark told Parliament that mentioning a flight to Honiara three days after it had occurred when many people had witnessed it was "no breach of confidentiality".
Air New Zealand chief executive Rob Fyfe also told staff in an internal message last month that its flights to the Middle East "were never secret".
Dr Cullen replied to Mr Palmer's letter earlier but yesterday sent an additional letter stating that in the view of the Treasury's solicitor, Ivan Kwok, there had been no breach of the (confidential) agreement between the Government and Air New Zealand about confidentiality.
Neither Helen Clark nor Dr Cullen were aware until yesterday that Air New Zealand tenders had to be referred first to the ADF head of procurement. Helen Clark did not believe it was an issue that needed to be discussed with Prime Minister John Howard or Mr Downer.
It was something that might be taken up by the Ministry of Foreign Affairs and Trade with their counterparts or through Foreign Minister Winston Peters.
Dr Cullen was not concerned about it either.
"I'm not going to get too fussed about it," he said.
Helen Clark told Parliament that Air New Zealand's credit rating with Moody's had improved yesterday from stable to positive "so I can only assume the airline is thought to be in good heart".
National deputy leader Bill English said that if it suited her political purposes she would "continue to aggravate the Australian Government with reckless disregard for Air New Zealand's interests".
Asked if she would make the Palmer letter public, Helen Clark told reporters: "Given his great concern about confidentiality, that will have to be given very careful thought."
Meanwhile, Foreign Minister Winston Peters in Australia described the fuss as "a mere bagatelle" that would not stand in the way of New Zealand's longterm relationship with Australia.
