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Potential for Air NZ to achieve major growth

26 November 2002

Media Release

Potential for Air NZ to achieve major growth the key to Qantas deal?

Instead of Air New Zealand remaining a small, vulnerable, local “international” airline, bringing Qantas on board provides the opportunity to grow the business with a strategic focus on the airline’s strengths.

In initial reaction to the Air NZ - Qantas alliance, Michael Barnett, Chief Executive of the Auckland Chamber of Commerce, said he was pleased to see the Air New Zealand brand would be protected internationally.

“It is vital for the New Zealand economy and exporters that we maintain a flag carrier airline, but also that the airline gets some scale and size to secure its future.”

Initial indications are that Air New Zealand will get the best of both worlds, said Mr Barnett. “The size will be increased and the brand into and out of New Zealand protected.”

“I presume that if there was a better deal around to secure the long term future of Air New Zealand, the airline management would have taken it.”

There are some risks, however, that the Chamber would like reassurance and consultation on as the deal is consummated in coming weeks, said Mr Barnett. These include getting assurances on:

- Benefits to consumers. Claims have been made of significant benefits to the traveling public who deserve to see the details immediately.
- A transparent and robust governance structure. It is essential that the merger’s performance not be personality-driven, but be locked down in a professional business plan.
- How “competition” between Qantas and Air New Zealand in the Australasian environment will be protected and managed without the need for boardroom theatrics as dogged the previous merger;
- A strategy to build the Air New Zealand brand internationally and get synergy from the association with Qantas.
- Ensuring New Zealand’s vital freight links to key markets are protected.

At the end of the day, it is perhaps time to acknowledge that the trans-Tasman market that Qantas and Air New Zealand have competed strongly over is a small fragment of a far larger global market that is available to both if we do things co-operatively.

“The CER agreement between New Zealand and Australia recognises both countries as a “single domestic” market. Perhaps this deal is recognition of a maturing on both sides of the Tasman - “On a global scale, we are one small, vulnerable market; by working together we can take on the world to mutual advantage and success. Our real competition long-term is not each other but the rest of the world!”

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