Qantas stake idea likely to fly like a dog

By JIM SCOTT

If Qantas is allowed to take a 20 to 25 per cent stake in Air New Zealand I predict that the decision will be judged as being the strategically dumbest move in New Zealand's commercial history.

International aviation is a critical component of New Zealand's economy, particularly in respect of inbound tourism.

If nothing else New Zealand needs to ensure that it has at least one home-grown "truly representative" international carrier.

More than 10 years ago when a New Zealand Labour Government sold Air New Zealand for $660 million, a consortium lead by BIL and Qantas was successful against British Airways.

This decision was so much against the weight of strategic evidence that many are still trying to understand how this happened.

Air New Zealand's major international association is with the powerful international airline group Star Alliance. If it needs to sell equity to another international airline, then almost by default this can only occur with a fellow Star Alliance partner.

When Air New Zealand joined the Star Alliance, Qantas, which was then 25 per cent owned by British Airways, sold its Air NZ holding and joined the competitive global alliance Oneworld.

The idea of Qantas now wanting to remarry Air New Zealand has probably got more to do with the fact that British Airways wants to sell its interest in Qantas than with any possible benefits for Air New Zealand.

Air New Zealand and Qantas are respectively the flag carriers of New Zealand and Australia. They are both parties to separate global alliances, which means that the South-west Pacific region has managed to strategically position itself with the widest possible spread of global alliance partners.

Within the region they are strong competitors and this is vital if we are to maintain a competitive market.

If Air New Zealand and Qantas wish to make localised commercial arrangements then that has nothing to do with the need for an equity stake.

Qantas and its Australian political colleagues are invariably driven by fear of failure and appear to be always paranoid about the need to control Air New Zealand.

The reality is that there is no commercial or competitive sense for Air New Zealand, or New Zealand's citizens, in Qantas having a close association of any form.

* Jim Scott is a former Air New Zealand chief executive.

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