Not for nothing is Singapore Airlines regarded as the creme de la creme of the airline business. Its formidable reputation is based upon efficiency and the alleviation of the acute discomfort of long-distance air travel. The success of that approach speaks volumes about the management expertise it could bring to any airline in which it took a shareholding. For Air New Zealand, that input would be the most favourable consequence of its recent takeover of Ansett Australia. Potential fish-hooks associated with the acquisition of Australia's second-biggest airline would instantly become much blunter.
Inevitably, there would be critics if a 25 per cent stake in the national flag carrier were sold to Singapore Airlines. In relative terms, Air New Zealand has been a success story, even if in recent years its star has lost a little of its financial lustre. That shine could dim further as competition increases in the Asia-Pacific market. Qantas, benefiting from its shareholding link with British Airways, has sharply improved its performance.
It appears better placed than Ansett to confront the imminent arrival of Sir Richard Branson's Virgin Airlines in Australia. The union of Ansett and Air New Zealand will introduce economies of scale in the likes of reservation systems. But despite that, and a virtual doubling of its revenue stream, Air New Zealand remains vulnerable to fierce and ever-increasing competition.
The airline's directors seem to have recognised that frailty. Air New Zealand's recent strategy has revolved around enticing Singapore Airlines on board as a shareholder. To that end, while Air New Zealand was threatening to exercise its pre-emptive right to stop Singapore Airlines buying News Corp's 50 per cent stake in Ansett, its biggest shareholder, Brierley Investments, was rejigging its portfolio so that a 25 per cent stake could be offloaded. The Singaporean interest, however, seems mainly to have been in Ansett, as a direct entree to the lucrative Australian market.
Whether Singapore Airlines is interested in the more indirect vehicle of a link with Air New Zealand is less clear. Air New Zealand's tactics in thwarting the Singaporean bid for Ansett may have created an animosity that hinders rapid rapprochement. But it is worth noting that the Singaporean Government, which controls Singapore Airlines, has, for most of the past decade, also been a significant shareholder in Brierley, the owner of 47.1 per cent of Air New Zealand.
Singapore Airlines is not without other options, however. Most notably, it could further develop its relationship with Virgin. It has delayed joining the likes of Air New Zealand and United Airlines in the Star Alliance while assessing those options - and the impact that membership would have on its brand.
Those who fear an increasing foreign influence upon Air New Zealand need not worry that the name is about to disappear. Only 49 per cent of Air New Zealand's shareholding can be held in foreign hands. This would also be no sudden outbreak of foreign sway. Brierley's share register has been dominated by Asian interests for several years, so much so that the company is now domiciled in Singapore. A more direct Asian input, in the shape of a Singapore Airlines shareholding, is the best way of ensuring that Air New Zealand is a prosperous regional airline. Hopefully, the strong logic that underpins a link will not be lost on Singapore Airlines.
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