Ansett scans skies for budget airline options

By DANIEL RIORDAN Aviation writer

Air New Zealand-Ansett chief executive Gary Toomey denies the airline group is talking to Virgin Blue about "acquisition or mergers or anything like that" but confirms Ansett may start its own budget carrier in Australia.

One option would be to send Air NZ's budget subsidiary, Freedom Air, to fly Australian domestic routes. Air NZ said last week that it was "technically possible" for Freedom to fly in Australia under the open skies deal.

Another option would be to start an Australian budget operation from scratch, something the airline was talking to unions about, Mr Toomey said.

Speaking publicly in Sydney, he said Ansett would be more likely to create a budget carrier if Virgin Blue was healthy on the main trunk routes.

Ansett also plans to add four B767-300s and two B737-300s to its fleet to bring it closer to parity with Qantas on the key Golden Triangle routes of Brisbane, Sydney and Melbourne. The four ex-Qantas NZ Whisper Jets not pressed into New Zealand service would also join the Ansett fleet.

Mr Toomey said Ansett was still considering its response to the takeover of Impulse Airlines by Qantas, which had been approved, with some conditions, by the Australian Competition and Consumer Commission.

He said the options included legal, commercial or competitive responses, the most likely being a combination of all three.

In New Zealand, Mr Toomey said, the group had increased its capacity to a level 4 per cent greater than the total market's capacity before Qantas NZ's collapse.

Although he called the year's first six months "one of the bloodiest periods in our aviation history," Mr Toomey said he was upbeat about the group's prospects.

Fuel prices had improved, and weak local currencies had boosted inbound tourism and stimulated the export-led economies of Australia and New Zealand.

The possibility of the group seeking "some transitional funding" from the New Zealand Government had been discussed, but no such proposal had been made or even prepared.

Suggestions that the airline might need Government funding as a "bailout" to stay in business were "simply false."

The airline expected to have $1 billion in cash by the end of June, was in good shape to meet current requirements, and was considering "development" funding to support its ambitious five-year growth plan - not "operating" funding.

The board meeting next month would consider fleet options.

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