Qantas Abandons Air Nz Tie-up

The Age

Thursday February 15, 2007

JESSE HOGAN

QANTAS has finally buckled to competition regulators and abandoned its five-year pursuit of a partnership with main trans-Tasman competitor Air New Zealand.

The deal, if approved, would have resulted in the two airlines co-operating on routes in and between Australia and New Zealand, as well as some over overseas routes, and would have involved the airlines jointly determining flight schedules and prices.

At the time of the October 2002 agreement, Qantas invested $NZ98 million (then $A91.7 million) in its rival airline, with a pledge to eventually tip in about $NZ550 million for a 22.5 per cent total stake.

The New Zealand Government approved the alliance but the Commerce Commission did not.

Then, last November, the Australian Competition and Consumer Commission also objected to the agreement, partly because the two airlines already controlled 80 per cent of the trans-Tasman route.

The termination has resulted in Qantas's $NZ98 million investment being converted to shares. It now owns 4.2 per cent of Air NZ. -- JESSE HOGAN

© 2007 The Age

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