Qantas eyes shuttered NZ franchise

In this story: Soaring dreams become a financial nightmare Landing fees prove the last straw RELATED SITES

By CNN's Ian McMinn

SYDNEY, Australia (CNN) -- Qantas Australia is again considering launching a domestic service in New Zealand, only days after its franchise there collapsed.

Just before midnight on April 20, Tasman Pacific Airlines, flying under the banner of Qantas New Zealand, halted all flights and the next day called in the receivers.

"Qantas had no ownership or equity interest in Tasman Pacific," Qantas spokesperson Michael Sharp told CNN, "but we have appointed a team to investigate whether there is now an opportunity to enter the marketplace."

To protect its brand, Qantas has sent one of its Boeing 767s to help passengers stranded by the airline's shock decision to voluntarily shut down operations and lay off 1100 staff.

Less than a year ago Qantas was sufficiently confident of Tasman Pacific's long term success for the Australian carrier to franchise its brand to another airline for the first time.

"We have always regarded New Zealand as an important market and have maintained a presence there for a long time," Sharp said.

Soaring dreams become a financial nightmare

The franchise seemed to offer Qantas the best of both worlds; an opportunity to enhance its brand by offering Qantas products and services without the expense of setting up and running an airline.

The deal also appeared faultless to the Tasman Pacific investors who bought Ansett New Zealand Ltd, a domestic carrier whose parent company, Ansett Australia, was for many years the domestic market leader.

According to airline analysts, what made the deal irresistible was Air New Zealand's eventual success in its exhaustive quest for Ansett Australia, which it bought from News Corp in March 2000.

Air New Zealand had no interest in running a second domestic service and Ansett New Zealand, in reality, was a branch office whose survival to a large extent depended on its Australian namesake.

"The Qantas/Tasman Pacific synergy was perfect," a former Ansett senior executive told CNN, "or so it seemed."

Landing fees prove the last straw

Qantas New Zealand took to the skies in September, timed to capitalize on trans-Tasman passenger demand in the run-up to the Sydney 2000 Olympics.

Within a couple of months there were signs that the airline could not withstand rising fuel prices, a falling New Zealand dollar and what it claimed were prohibitive landing fees.

The Qantas team and the receivers will soon have a better idea if under-capitalization was also a factor, and to what extent.

But airport charges finally put the issue beyond doubt with Wellington International Airport threatening to deny landing rights on April 23 if Tasman Pacific did not immediately pay $290,000 in outstanding landing fees.

Instead Qantas New Zealand brought in the receivers.

The question now is whether Qantas Australia determines that the demise of its only franchised business was a timely warning or a sign of an opportunity to open the real thing.

"At this stage there is no timeline, no commitment but we are considering all the options," said Sharp.

Qantas
Qantas New Zealand

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