iscover
Issue 47: November/December 1988
Qantas Listed as the Preferred Option in Air New Zealand Share Sale
The New Zealand Government surprised much of the aviation industry during late September when it officially selected Qantas as the favoured bidder for a 25% shareholding in Air New Zealand. Prior to this, many observers, including the management of ANZ itself, had considered British Airways a certainty for the share package.
Whether or not the NZ Government announcement was merely a tactic aimed at forcing up the value of the initial BA bid remains to be seen; though at press time, it appeared that Qantas was not only quite content with the spectre of owning a quarter share of its trans Tasman competitor but was actively canvassing the benefits of same. And indeed the benefits are many.
For starters, a direct ownership involvement in ANZ by Qantas should entitle the Australian carrier to a seat on the board in addition to establishing a liaison status between the primary sectors of operations, management and marketing in an effort to ensure that both airlines’ interests were fully promoted in the new arrangement. Both carriers have considerable affinity in terms of product identity, aircraft commonality and long-term marketing objectives. A tie-up for instance would enable the entire Australasian region to be marketed overseas as a single package, something that would help allay the fears of both airlines as to the long-term swamping effect of the US mega airlines, United and Continental.
This content is available exclusively to Australian Aviation members.
A monthly membership is only $5.99 or save with our annual plans.
- Australian Aviation quarterly print & digital magazines
- Access to In Focus reports every month on our website
- Unlimited access to all Australian Aviation digital content
- Access to the Australian Aviation app
- Australian Aviation quarterly print & digital magazines
- Access to In Focus reports every month on our website
- Access to our Behind the Lens photo galleries and other exclusive content
- Daily news updates via our email bulletin
- Unlimited access to all Australian Aviation digital content
- Access to the Australian Aviation app
- Australian Aviation quarterly print & digital magazines
- Access to In Focus reports every month on our website
- Access to our Behind the Lens photo galleries and other exclusive content
- Daily news updates via our email bulletin
Both airlines are also reasonably diversified yet maintain share interests in other companies that combined together adds up to a considerable degree of marketing clout within the region. Qantas for instance owns a 49% share in Thomas Cook Pty Ltd, a 20% share of Fiji’s Air Pacific (which includes a 7 year management agreement), a 33% share in TEAS, the Australian travel industry CRS system and of course wholly owns its Jetabout travel operation. ANZ on the other hand has a small shareholding in Air Pacific, a 50% share of Jetset Tours, 50% of the New Zealand MAARS CRS system, 50% of NZ commuters, Eagle Air and Air Nelson, in addition to the entire Mount Cook Group which includes substantial South Island ski resort holdings in addition to Mount Cook Airlines.
The other consideration of course, which is considered to be Qantas’ primary reason for its enthusiasm for claiming a viable stake in Air New Zealand, is that it keeps a foreign mega airline, such as BA, JAL or United, from gaining a strong foothold in this part of the world. This, of course, is precisely what ANZ senior management would have liked. A link-up between ANZ and British Airways (which also includes BA’s substantial affiliation with United Airlines) would have seen the small South Pacific orientated carrier reach out to the world with large and powerful friends, while BA would have gained direct market access to a part of the world that presently is largely restricted to it. The concept· of building a substantial maintenance facility for BA aircraft in New Zealand would also have had wide ranging attractions considering the physical limitations of further expanding BA’s Heathrow engineering base and the strength of Sterling vs the NZ Dollar.
What will probably sway the ANZ board though (assuming they actually have some input into their fate, which is considered most unlikely!) is that under the Closer Economic Relationship (CER) programme, which is always big news in NZ but almost unknown locally, ANZ might be given unfettered access to Australia’s domestic route structure once deregulation is introduced come October 1990. Both governments have in recent times stated publicly that for CER to work in aviation terms, then the entire Australasian arena should be treated as one domestic market for all concerned. Thus the spectre of ANZ flying Sydney/ Melbourne, etc come deregulation, should not be ruled out. Similarly both Australian and Ansett would benefit from serving alongside Qantas and ANZ on the trans-Tasman, while Ansett itself could then link its New Zealand operations directly into its large Australian network. Where Qantas fits into this in terms of domestic operations is unclear, though the likelihood of it teaming with other interests to form a new domestic carrier is always a long-term possibility.
Events are moving rapidly, if for instance eighteen months ago an interested airline observer could have predicted what has already occurred, then he or she would have been duly ridiculed. By 1993 I am sure that what is written today will appear tame in terms of what is possible of the then immediate future. It will certainly be interesting though in some respects it may just be another case of the wheels of progress turning full circle. While both governments are pushing for a marriage between ANZ and Qantas, it is worth remembering that the Australian Government was itself a 30% (later to grow to 50% in 1953) shareholder in the original Tasman Empire Airways Limited (TEAL) when it was founded back in 1939. In a growing mood of nationalism, the NZ Government later acquired Australia’s share in the soon to be renamed Air New Zealand. That was 1961 and the 50% TEAL shareholding went for only $NZ1. 6m – regardless of inflation that’s still a steal when compared with the rumoured $A150m that is said to be the present estimated value of the 1988 25% share in Air New Zealand.
Want to see more stories from trusted news sources?
Make Australian Aviation a preferred news source on Google.
Click here to add Australian Aviation as a preferred news source.
