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Air New Zealand rivals take aim at government-backed airlines

Qantas and Cathay Pacific have both complained about their government-owned or backed rivals, including 80% government-controlled Air New Zealand.

The airlines are taking two vastly different approaches to dealing with this challenge, and Qantas’ call for government help could have big repercussions for Air New Zealand.

Cathay Pacific, which today announced massive capacity reductions and a scheme asking staff to take some unpaid leave, raised the issue of aviation protectionism at the announcement.

“Unlike many of our competitors, we get no government financial support or subsidy. We must make our own way as a commercial airline,” said chief executive Tony Tyler.

“To do this we must above all preserve cash. We have made it clear that we want to keep our team together as far as possible, but we need to take all of our cost factors into account in these unprecedented market conditions.”

Based in Hong Kong, the bastion of free-market capitalism, it is no surprise the airline is forced to go it alone and operate like a normal business would in tough conditions.

But the noises from across the Tasman will be more of a concern for Air New Zealand.

Qantas needs “saving” from “unfair competition” from foreign government-backed airlines, claims the Australian Council of Trade Unions (ACTU), which is meeting with the airline today over its decision to cut up to 1750 jobs.

Describing Qantas as “an essential part of our social and economic infrastructure”, ACTU secretary Jeff Lawrence says, “We are also concerned about the unfair competition Qantas faces from airlines which are owned or propped up by overseas governments”.

These include Singapore Airlines, Emirates, Air China, Malaysia Airlines, Tiger Airways and, of course, Air New Zealand, although it is barely a blip on the radar compared to these massive operators.

Mr Lawrence’s statement reflects concerns shown last week by Qantas chief executive Alan Joyce in an interview with newspaper The Age.

“Some of the other airlines that operate out of here are doing it as government entities. They don't have to make the same returns,” he said.

“They have a sovereign status in terms of funding for aircraft and that does produce an un-level playing field. We have always asked for a level playing field and that is still our position.”

Air New Zealand will be watching the Australian government’s response with interest.

Any intervention or regulation of the Australian aviation market could have a major impact on Air New Zealand, which, while government-owned, is listed on the sharemarket and run as a fully commercial business.

More by Niko Kloeten

Comments and questions
10

The measures successive Australian govts have taken to protect their beloved Qantas & inhibit competition - some selective memory at work here - then it is an Australian union leader talking - hardly someone you'd give credit to in the best of times.

Qantas' laments over so-called "government backed -airlines" is beginning to sound like a broken record. Let us not forget the years of aeropolitical subsidisation of their transpacific route via lack of liberalisation. Let us recall the hundreds of millions of Qantas debt that was wiped out by the Australian government in the early 1990s.

And one does not need to cast one's mind back too long to find out that Qantas has started to make a bed with Etihad Airways which by many yardsticks is more "government-backed" then its fierce foe Emirates !

Hypocrisy troubles me.

The Australian government has previously reneged on the "Open Skies" agreement to protect Qantas. That saw Ansett go down. The NZ Government is only a shareholder in Air New Zealand. It does not fund the airline.

Mike, How can one subscribe for shares in a company without providing funding to the company? share are equity funding of a company by definition. NZ govt should hear the message and rather than defending itself, admit that it isn't right and sell its shares.

Selling (or buying) shares for an Ideological reasons is not smart.

Danger in the union statement ,the words are really the official words ot the Rudd Government,served up in a de facto way,go figure.

Well maybe if qantas gave the same service,provided personal Tv monitors to its clients,and improved the standard of food supplied more would want to fly qantas.
I personally never want to fly with qantas again ,after having experienced flying with air new zealand.
Sounds like sour grapes to me !
Air New Zealand does it better -far far better !

Maybe also if there wasn't so much of an open skies agreement between NZ and Australia airlines such as Qantas could make the Tasman more profitable.

I know competition is good, but why not keep the money at home (both NZ and Australia) by only allowing NZ and Australian registered airlines to fly the Tasman ! Local jobs would be kept as well !

Hey if the government went and sold there AirNZ shares they should be shot! As a tax payer I want to see the government sell at AirNZ peak so hold on for the shaky rid and lets hop in a couple of years time the government can sell and turn a nice little profit out of it.

Yeah Nathan we really want to retreat into a protectionist mode - that'll help when we're trying to neg. access other country's markets!
Do you think before you type?