Air NZ's bid for Ansett Australia

Air New Zealand's interest in the Australian domestic airline market emerged in the 1980s, in part responding to Ansett New Zealand's entry into the New Zealand domestic market, but more importantly because it was seen as a feeder to Air New Zealand's international services.  For some years it simply wished to operate domestic flights itself with international aircraft, but after the collapse of the agreement to form a single aviation market in 1992, the emphasis shifted to acquiring an interest in Ansett Australia.  This ultimately would prove to be ill-fated.  Below are a series of articles about the pursuit of access to the Australian domestic market and Ansett.

Evening Post 7 October 1987

This report notes Air NZ's view that the NZ domestic market could not sustain two airlines, and its desire to seek reciprocity. It noted the Australian Government's decision to abolish its "Two Airline Policy" that kept most Australian domestic routes under a regulated duopoly of Ansett and Australian Airlines (once known as TAA, and later acquired by Qantas).  Curiously the view at the time in Australia was that deregulation would mean Ansett would become the dominant airline in Australia, because Australian Airlines being government owned hobbled its commercial capabilities, and ability to raise capital (this would be clearly resolved by enabling Qantas to acquire it).  At the time Air NZ said it had "plans for a domestic airline" in Australia, which of course would never come to pass.

This 1995 report noted Air NZ was seeking to buy TNT's shareholding in Ansett Australia. It had been pursuing Newscorp's 50% shareholding, but that did not proceed. TNT's shareholding was reportedly worth NZ$450m (a drop of $100m from the Newscorp bid, because Ansett's operating profits had dropped significantly.

Evening Post 31 January 1996

27 October 1995 Dominion

Why the fuss over Air NZ's bid for Ansett Australia?

Accelerate to 1996 and Air NZ's was seeking to by 50% of Ansett Australia, but faced opposition in Australia and the question of ring fencing Ansett New Zealand (as this was obviously its key domestic competitor in New Zealand). The Commerce Commission was concerned in particular about the latter (it had no interest in the Australian domestic market, and did not believe it would negatively affect the international market. It was also noted that Air NZ (then fully privatised) was 65% owned by NZ shareholders with the largest of those itself being majority foreign owned. 

The Commerce Commission noted the benefits that Ansett NZ brought to the NZ domestic market including improvements in service quality, but also significant reductions in real airfares compared to when Air NZ was the sole operator on many routes.  Some facts noted were:

• Ansett New Zealand was set up with 800 staff and built three terminals itself
• 28 airlines were registered to provide scheduled air services in NZ in 1996
• Air NZ provided 620 flights per week on trunk services, with Ansett NZ providing 490 services
• Air NZ had a 60% market share on the main trunk (80% on regional routes)
• 60% of domestic airline tickets were sold by travel agents (this was very much before the internet had become a platform to sell airline tickets)
• 43% of Trans Tasman capacity was provided by Air NZ with 38% by Qantas, other operators on the Tasman at the time were Thai and United