Hard News by Russell Brown

Southern Skies

We, the public, have conflicting interests over the Air New Zealand-Qantas deal.

The proposal is presently the best - well, the only - option for New Zealand taxpayers who do not wish to spend the next decade spending money to support their 86 per cent shareholding in an international minnow, in order to avoid the fate of the Swiss in losing our national carrier. We would probably have done so in the face of fairly brutal competitive action from Qantas.

In perhaps the biggest shift since rumours of the deal began to emerge this year, Air NZ CEO Ralph Norris has managed to talk the business community around to this perspective.

But we are also travellers and dispatchers of freight across the Tasman. And the proposal for the two airlines to co-operate to the extent that Air New Zealand will assume management of the New Zealand and trans-Tasman operations of both brands stands, quite obviously, to lessen competition on those routes.

The Australian competition watchdog, the ACCC, a more active regulator than our Commerce Commission (to put it mildly) has already signalled problems with the deal. The extent to which the plan can be massaged to meet public interest requirements remains to be seen. It may require a degree of regulation that has been unfashionable in these parts for nearly two decades. Are the times a-changin'? Probably.

I can't help but feel that the what-to-do-about Air New Zealand debate is overly captured by history. Last year, Singapore Airlines wanted the government to lift the foreign ownership threshold in Air New Zealand so it could increase its holding to 49 per cent. We could have had that, Bill English says.

But would Singapore really have gone through with the deal once due diligence had revealed the true state of Air NZ's Ansett subsidiary - which the feckless Air NZ board was then concealing from even our own government? And would it have been better anyway? Singapore Airlines is one of a group of Singaporean government-controlled companies slammed over the past two years for their poor performance.

The other historical element is, of course, the period where Qantas behaved aggressively and destructively as a minority shareholder in Air NZ. It appears even Qantas realises that didn't work.

Virgin Blue, which set up in Australia last year, has, as you might expect, spat the dummy over yesterday's announcement, but it would be wise not to take that airline's pronouncements at face value. This is presently all a game of show and posture right now. But what did SIA deputy chairman and chief executive Dr Cheong Choong Kong mean when he told the Herald this in July last year?

"There are things I cannot say publicly but I would be surprised if we see Virgin Blue in New Zealand …Richard [Branson] and I have a lot of discussions on a lot of things, including this."


And the good news for today: another dim-witted right-wing populist part has come to grief after reaching government, this time in Austria. The undoing of such people is always and inevitably their stupidity. Morning, Winston!