Air NZ ready to fight off Qantas

Analysts say the Australian carrier's ultimate goal is to buy a share of its Auckland-based rival. SCOTT MacLEOD reports.

Air New Zealand has vowed to fight any attack by Qantas as the Australian airline reportedly prepares to knock its rival out of business.

Aviation analysts said yesterday that Qantas would indeed wage war in New Zealand - not to kill the local carrier, but to buy part of it.

The extra short-term competition would be good for travellers, exporters and the tourist industry because it would force down airfares and offer more flights.

The comments came after Qantas chief executive Geoff Dixon reportedly told 70 of his managers that he planned to attack Air NZ and "put it out of business".

Mr Dixon said the report was wrong, but audience members said it fairly reflected his speech last month.

Air NZ chairman John Palmer said yesterday that his airline would vigorously defend its markets and had spent three months preparing for stronger competition.

"Threats from Qantas are nothing new for us," he said.

"The only surprise this time is that they are actively seeking a damaging and costly battle on two fronts" - against Air NZ and Ansett II.

A senior consultant at Sydney's Centre for Asia-Pacific Aviation, Ian Thomas, said Qantas was likely to boost its flights between Auckland, Wellington and Christchurch.

The pressure would make life tough for Air NZ and force our Government to find someone to invest in the local carrier.

He said most overseas airlines had been stung by the September terror attacks and would be unable to invest in Air NZ, so the Government would have to let Qantas buy a stake.

It was possible Qantas could force that situation by the end of this year, Mr Thomas said.

"Qantas sees Air NZ as a potential partner, but in the short term you have to force that situation and create a market in which you are applying pressure."

Christchurch-based aviation commentator Les Bloxham also believed that Qantas was not trying to kill Air NZ and could get a chance to buy part of the airline.

But he said Qantas also wanted to boost its presence here so it could feed more passengers on to its international flights.

"That's good for travellers, exporters and tourism because Air NZ has been forced to cut back its services," Mr Bloxham said.

"Qantas is no fool. If it sees opportunities, it will jump at them."

Air NZ is traditionally seen as a lean, tough airline. But it was nearly killed by its purchase of Ansett Australia. Ansett's collapse last year caused Air NZ to post a record loss of $1.3 billion, forcing the Government to buy an 82 per cent stake.

Qantas, on the other hand, benefited from Ansett's collapse and was one of the few big airlines to survive September 11 in a strong position. It now employs three times as many staff as Air NZ and flies more than twice as many passengers.

Qantas' chief financial officer, Peter Gregg, said his airline's New Zealand operation was "not sustainable" in its present form. One option was to boost flight numbers by bringing in two more aircraft.

Mr Gregg said that should not be seen as a move to knock out Air NZ. Qantas had been told the New Zealand Government was unwilling to sell part of its airline for at least 12 months, and Qantas accepted that.

Air NZ's Mr Palmer said his airline had been working on new strategies to fight competitors, and managers met again yesterday to discuss them.

He would not reveal what the strategies were, but said they would start within the next few months.

He said Air NZ had $420 million in the bank on Friday.

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