An open aviation market is worth revisiting while we consider the merits of an Anzac bubble

There’s mounting enthusiasm in both Anzac countries to create a Trans-Tasman bubble linking both for air travel and tourism.

Why not?

Those  familiar  with history  say  the two countries should go a step further and re-invent the famous open market which was killed by the then Australian Transport Minister, Laurie Brereton, back  on October  23, 1994?

Reincarnated, this might serve both countries well  at this critical  point  for their economies.

In the early 1990s, both Canberra and Wellington envisaged a single market where the airlines of each country could fly freely to and within the other.  The idea had its genesis with the late Sir Peter Abeles when he chaired TNT, the former Australian multi-model transport giant.

Sir Peter was joint chairman, with Rupert Murdoch, owner of the vast News media empire, of Ansett Australia. He took advantage of NZ deregulation to launch Ansett NZ in 1987 but soon realised the only way it would ever become commercially viable would be to link Ansett operations in both countries.

This ran foul of the current air services agreements between each country.

Wellington would not allow Ansett NZ or Ansett Australia to fly the Tasman – essential for Sir Peter’s plan – as neither airline had majority Australian or NZ ownership.  Part of the problem lay with News Corporation’s 50% ownership of Ansett Australia, given the high degree of international interests in the media giant.

Discussion continued fitfully over several years until, in the early 1990s, there seemed common cause.

This was shot down by Australia in a famous letter sent by fax from  Australian Federal Transport Minister Laurie Brereton to his NZ counterpart, Maurice Williamson, on that day  in October 1994 – Labour Day in NZ – which effectively killed the single market for the time.

New Zealanders were shocked.  In fact, the NZ High Commissioner of the day in Canberra, the late Graham Fortune, had been dining with Graham Evans, head of the Australian transport department, the previous evening and nothing was said.

We cannot blame Evans, because it subsequently became known that the letter was actually drafted in the office of   Federal Prime Minister Paul Keating.  Brereton simply provided the signature.

Evidence came with the fax number atop the letter sent by “Brereton”.  It was actually from the fax machine in Keating’s office.

The Australian PM was never a great friend of NZ.  At one point after Canberra had made some concession to NZ, he said Wellington would receive no more “scrapings from Australia’s plate.”

Despite the antipathy, the letter contained interesting detail. It said the single market was being abandoned only days before commencement because NZ had failed to arrange for Air NZ to begin Australian services while there had been no progress in forming a common Customs and Immigration border.

The Australians were mortified that some Pacific Island states would use this as a backdoor entry into Australia.

Where to now,  26 years later?

Air NZ is going through the hardest days of its life.  Qantas has been badly hit, cancelling all long-haul international operations.  Virgin Australia has sunk into administration buried by a mountain of debt – it owes more than $A6.8Bn to more than 12,000 creditors, including $A450m to employees, banks, aircraft financiers and landlords

NZ and Australia have had several differences over Customs and Immigration. It should be possible in these hard times to fashion a compromise.  Then the Tasman Sea could become like Cook Strait.  Air NZ could fly within Australia and Qantas within NZ.

Both airlines already hold existing traffic rights to fly international services beyond the other.

From an airline economics point of view, NZ and Australia (apart from its rich eastern corridor from Melbourne through Sydney to Brisbane) are too small to sustain full-service airlines.

Former Qantas chief executive Geoff Dixon argues Australia can really support only one and a half airlines.  He should know, having weathered the storms of the 1990s and early 2000s.

Air NZ might provide that half?

Air NZ might find employment for much of its international fleet in Australia – and vice-versa for Qantas.

Here is another idea: to protect the industry and give it a sustainable base, might not we return to economic regulation, even for only a shorter period?

Before 1983, NZ air transport was controlled by the Air Services Licensing Authority, chaired by a lawyer and two other members from the business and aviation world. It controlled fares, routes and standards of service.

For example, when National Airways Corporation (later merged with Air NZ) wanted to raise fares, it had to justify the increase before the authority whose meetings were open and anyone could attend or appear.

The authority was no rubber stamp.  It could also hear applications by new operators to run air services.  These were allowable provided they did not undermine NAC’s basic operating principles, laid down in its legislation, to be a “public service” airline, serving the regions and the main trunk with reasonable fares and service through airports run as joint ventures by local authorities and the Ministry of Transport.  No private sector owners seeking full economic returns in those days.

Worth considering?

Can  Transport  Minister  Phil  Twyford  emerge  from  his  torpor  and  do  something  positive  for  NZ?   Is  this a chance   for  him to  redeem   his political  reputation,  out of the ashes    of  his  KiwiBuild  fiasco?

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.