Editorial: Don't sell our airline to Qantas

By happy coincidence the future of Air New Zealand has come to the crunch in the middle of a general election. At least, it would be a useful coincidence if the Finance Minister was prepared to acknowledge that Qantas is preparing to bid for effective control of the airline. So far Michael Cullen has managed to hide behind the fact that no formal offer has been put to the Government.

Possibly he imagines that if he keeps his head in the sand, the voters will not be disturbed. In fact, Dr Cullen's studied silence speaks volumes. If the Qantas proposition was as objectionable to him as it surely is to most of the public, he would come out and say so. Silence can only mean he and his colleagues are seriously open to the proposal, though they dare not say so before the polls close on Saturday.

Qantas is a most welcome competitor for Air NZ on transtasman services and, since the collapse of Ansett NZ, on main trunk domestic services, too. But it is as a competitor, not a monopoly, that the Australian carrier should continue to operate here.

Would that the same could be said of Air NZ in Australia. Had the Keating Government not reneged on an open-skies agreement just as Air NZ was preparing to compete there, the airline would not have bought into Ansett Australia, and the whole sorry saga that came to a head last year might have been avoided.

Now that Ansett has collapsed, on both sides of the Tasman, and Air NZ has been rescued by the taxpayers, Qantas is moving to consolidate its position as the dominant carrier of the region. Just a year ago it was lobbying the Australian and New Zealand Governments for all it was worth to defeat a bid from Singapore Airlines for Air NZ-Ansett Australia. That merger could have left the two big global alliances, Star and Oneworld, competing in the region through SIA and Qantas respectively, though Qantas obviously feared the prospect.

It made its own pitch for Air NZ-Ansett and the Australian Transport Minister travelled to Wellington to make his Government's views known to ministers here. From this country's point of view, it seemed a no-contest. We were offered a choice between competition and a single dominant Australian carrier. Yet Dr Cullen seemed even then to be well disposed to a Qantas buy-in, as he might be now. If nothing else, the Qantas play confused the picture during June/July last year when the Government failed to grab the Singapore deal when it could. Once the full extent of the merged airline's capital needs were assessed, SIA and Qantas withdrew, leaving Ansett to its fate and Air NZ at the mercy of its Government.

The experience has taught us one lesson above all: a national airline is not going to be allowed to collapse like any other business that has bitten off more than it could chew. The Government cannot contemplate an uncertain supply of air services, no matter how likely it is that other airlines, large and small, will quickly expand to serve a profitable demand.

If the Government is willing to see Air NZ pass into Qantas control then it must explain why it did not simply sell the airline to its rival last year? Why go to the expense of bailing it out only to sell it now? Certainly, the Government might sell now for more than it paid for the shares, but the public capital invested in the airline last year has a cost that ought to be recovered. Air NZ has a value in tourism and national promotion beyond its value as an airline, and competition has a value for the public far beyond the business merits of a merger. The Government should resist a Qantas offer and wait for the international airline shake-down to offer a more competitive proposition for this country.