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    Big airline ready to plug the Ansett gap
    By Darren Goodsir in Shanghai and Michelle Grattan
    June 3 2002





    The world's largest airlines group is close to backing one of its members in the launch of an offshoot as a third Australian carrier.

    Delegates from a conference in Shanghai of Star Alliance airlines indicated that the job could go to Singapore Airlines or possibly Air New Zealand.

    The new carrier would aim to fill the vacuum in its world routes created by the collapse of Ansett - and to address the continuing concerns of alliance passengers over their ensuing inability to
    redeem frequent-flyer points in Australia.

    The start-up airline would intitially aim at limited domestic flights on the congested east coast routes.

    The Federal Government welcomed the idea. The Minister for Transport, John Anderson, said yesterday that he looked forward to "a very real possibility" of a third airline.



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    The climate and policy framework were right, he told Channel 10. "And given that many of the inefficiencies that held the sector back before have now been challenged or broken, the private sector will see to it that you see a growing sector."

    The industry was a growing slice of the economy anyway, and so the slack would be taken up. "I'm quite confident you'll see new entrants try."

    The chief executive of Singapore Airlines, Cheong Choong Kong, agreed that Ansett's demise had created a vacuum in network coverage, adding "we are working on solutions to compensate for that loss".

    "But you wouldn't expect us to do Qantas a favour by annunciating our strategy in a public domain in a forum like this."

    Dr Cheong described as an "interesting suggestion" the possibility that an alliance airline could play a major part in filling the gap on Australian routes.

    "We are extremely open-minded and we are leaving all our options open and flexible."

    Air New Zealand's chief executive, Ralph Norris, said the launch of a third domestic airline was one of a series of options being developed to overcome "the hole" left by Ansett and to help increase feeder traffic to its partners.

    "It certainly is an issue," Mr Norris said. "Air New Zealand has been looking at its options, particularly on the east coast of Australia, but we haven't taken any decisions as yet in this regard. I won't rule out anything. It is an option, but it hasn't got much traction at this point in the alliance."

    United Airlines' senior vice-president, Graham Atkinson, agreed that a solution needed to be found to help his passengers get beyond Australia's capitals.

    "There is clearly a hole," he said. "To have an effective presence in Australia, you really need someone ... us or a partner, who can carry passengers domestically as well as internationally."

    Since Ansett's collapse last September, when Star Alliance members declined to honour many frequent-flyer trips, passengers on United, Air New Zealand, Thai and Singapore airlines have been unable to redeem loyalty points in Australia.

    Bookings for travel within Australia have also been difficult. There are no lounge facilities, and connections are cumbersome, with passengers required to re-check bags and book new tickets on either Qantas or Virgin Blue.

    Qantas, a member of the rival oneworld affiliation, has offered Star Alliance airlines discounts for tickets, but this is not seen as a workable alternative.

    On some routes, including Adelaide and Canberra, Air New Zealand's feeder traffic has dropped by 25 per cent.

    Other Star Alliance carriers have been carrying healthy loads, but the lack of an Australian partner is a long-term concern.

    Air New Zealand, which cut loose its wholly-owned Ansett subsidiary and needed a massive New Zealand Government rescue package to survive, is now anxious to revive some missing links for Star Alliance passengers.

    The airline could even receive limited financial support from some alliance airlines to begin operations.

    Because of the deregulated trans-Tasman market, Air New Zealand can start domestic services in Australia with few hurdles - just as Qantas is competing vigorously in New Zealand.

    Meanwhile, the chief executive of Qantas, Geoff Dixon, was scheduled last night to hold fresh talks with Mr Norris on Qantas's hopes of taking a 25 per cent shareholding in Air New Zealand.

 
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