Qantas plants Ansett bait to snare Air New Zealand

Friday 1st June 2001

RIPE FOR PICKING: Air New Zealand chief executive Gary Toomey, public affairs manager David Beatson and acting chairman Jim Farmer consider their options this week

By Nicholas Bryant

Qantas is plotting to persuade the government to back down and let it buy Air New Zealand by promising Ansett will return to local skies.

It is understood Singapore Airlines has been made aware that any purchase of its 25% of Air New Zealand by Qantas would be contingent on the Asian carrier running Ansett as both a transtasman and domestic main trunk carrier.

The requirement is designed to appease local regulator the Commerce Commission and a concerned Labour-Alliance government.

Singapore Airlines is playing its cards close to its chest, saying it did not engineer or initiate the Qantas buyout option and that it does not necessarily favour the option over any other.

The return of the old Ansett New Zealand brand would be the ultimate irony in what has been a rapidly revolving door for domestic competitors to Air New Zealand.

With the impending arrival of Virgin Blue, Qantas believes the rebirth of Ansett New Zealand would see the local competition base firmly covered.

It also has high hopes of convincing the government to let it buy out Brierley Investments' 30% along with Singapore Airline's holding. Despite government policy stating that a single foreign airline may own a maximum of only 25% of Air New Zealand and multiple foreign carriers only 35%, Qantas hopes to structure its deal so it will not technically breach the rules.

It will copy Brierley Investments, which despite being a Singaporean company owns 30% of "local-only" Air New Zealand A shares through a Wellington-based trust company.

Qantas believes the government has set a precedent in acquiescing to the BIL ruse.

That concession did not jeopardise bilateral air service agreements. In this case interests associated with or sympathetic to Qantas could own stakes, giving it control without breaching government policy.

With the tough new Takeovers Code only a month away Brierley Investments and Singapore Airlines will wish to sell quickly to escape its requirements.

After July 1, when the code comes into effect, they will no longer be able to request a premium of Qantas for their stakes without Qantas offering the same amount to all other shareholders. "The right to natural justice has always been accepted in New Zealand," Mr Churchman said. "It is enshrined in our Bill of Rights. The decision clearly states that natural justice outweighs the need for speed and informality, which is one of the goals of the authority under the Employment Relations Act."

But, he said, the decision was unlikely to drastically disrupt the authority's speedy, informal and practical disposal of employment relationship problems.

"One of the consequences of allowing cross-examination may be a greater acceptance of the authority's determinations," Mr Churchman said.

On the other hand Council of Trade Unions president Ross Wilson said the decision had the potential to "legalise" the authority and "re-introduce delays in the hearing of cases." He said the decision torpedoed the Employment Relations Act model of relatively non-legal process. "The court decision is a lawyers' charter and we could once again see lawyers cross-examining for days on end as their fee meter ticks over."

The Employment Court referred to the refusal by the authority - when dealing with a personal grievance complaint - to permit cross-examination as indicative of a mindset or attitude against cross-examination.

"As such it is of questionable validity because it precludes the proper acknowledgment of litigants' rights on a case-by-case basis," Chief Judge Tom Goddard said on behalf of the full bench.

The Employment Court said it had reached "a firm and unanimous conclusion that, having regard to the nature of the authority and the subject matter of most of the matters that come before it, cross-examination is a necessary ingredient of the principles of natural justice at every hearing at which a party wishes to exercise that right, being a hearing or meeting that can lead to the establishing of facts and a determination based on them of the merits of an employment relationship problem."

Arguing the government's case, Solicitor-General Arnold conceded there might be some rare occasions when the principles of natural justice might require the authority to permit cross-examination.

But the full court said it could not accept Mr Arnold's concession "sufficiently ensures the application of the principles of natural justice by the authority."

The man at the centre of the case - page 15

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