Virgin sets sights on last NZ obstacle

By SCOTT MacLEOD transport reporter

After the hoopla of its arrival at Wellington Airport yesterday, no-frills airline Virgin Blue begins the hard work today of bringing its cheap service to New Zealand.

One thousand spectators and 25 journalists watched as a new Virgin Boeing 737-700 landed, carrying chief executive Brett Godfrey and a gaggle of hangers-on.

The work began as soon as Mr Godfrey stepped off the plane and into the arms of ex-customer services officer Kay Bayliss, who gave him a list of staff sacked from now-defunct Qantas NZ.

But the real business starts this morning. Mr Godfrey is to breakfast with Civil Aviation Authority chief executive Kevin Ward and then dash to a 9 am meeting with Transport Minister Mark Gosche.

The talks will centre on Virgin's ability to fly passengers across the Tasman under last November's "open skies" deal with Australia, which gives each country's airlines access to the other's airspace.

Virgin Blue meets three of the four criteria that would give it automatic access - it operates in Australia, has its headquarters there and has a board that meets there. But it is owned by an Englishman, Sir Richard Branson. England has no open skies deal with NZ.

Speaking after stepping off the bright-red Boeing yesterday, Mr Godfrey said that under the regulations he believed there was little to stop Virgin from flying within NZ, but the ownership problem was still a sticking-point for flying passengers across the Tasman. This morning he would ask Mr Gosche to use ministerial discretion to waive the ownership clause.

If Mr Gosche refuses, Virgin may be forced to set up a new headquarters here to get around the problem. Mr Godfrey said the airline did not want to do that - it wanted to run all its operations from Australia to keep its costs down.

Virgin would "have to think" about the viability of flying in NZ if it was forced to set up another office.

"The question is this," Mr Godfrey said. "Is there anything wrong with us flying here and saving people $200 on a plane ticket? There's plenty of trunk route fares going for $500 to $600 that should be cut in half at least."

Mr Gosche could not be reached yesterday to answer that question.

Virgin's visit is the latest in a series of tumultuous events in New Zealand aviation.

Air NZ will tomorrow launch a pre-emptive strike at Virgin by selling cheap tickets on its subsidiary, Freedom Air. But Virgin's Mr Godfrey said his airline was undeterred by the move.

Air NZ was expecting more good news yesterday on whether its troubled subsidiary, Ansett Australia, would have the fourth of 10 grounded Boeing 767s cleared to fly after being grounded on Easter Thursday amid safety concerns.

Air NZ/Ansett chief executive Gary Toomey said he hoped all 10 would be flying by May 4.

The groundings had cost $5.2 million by Friday.

Mr Toomey said Ansett's 767s would be sold to General Electric and leased back while being progressively replaced, which would take until 2004.

The airline would spend $25 million on a six-month advertising campaign that it hoped would quell public concern about the groundings.

Meanwhile, Qantas Airways said it would make an announcement this week about its plans for New Zealand.

The Australian airline has been talking with Nelson-based Origin Pacific about providing "feeder" services from smaller centres to the main airports. Origin plans to double its aircraft from seven to 14.