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selecta · Member Joined: 24 Dec 2006 Posts: 813 Location: ORD

Monday, January 15, 2007
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The Centre of Asia Pacific Aviation founder and executive chairman Peter Harbison has predicted that the ambitious bid made by Airline Partners Australia (APA) will go through purely on the basis that the failure of the deal will be more horrendously harmful than its success.

Last week, Harbison commented that “if the deal is knocked back, there would be a massive loss of confidence and the share market would bale out of the stock sending the share price below last year’s lows.”

It is not only such as result that would be a major blow to the Australian aviation psyche, but Harbison believes that Qantas’ international status as a top-tier airline would have diminished into a name of ill-repute with or without the furore of a consortium bid.

“This [privatisation of government-owned airlines] is an international trend and beyond the control of the Australian Government, even if it wanted to prevent change,” commented Harbison. “In the face of this evolutionary process, Qantas would be lucky to survive another 10 years in its current form.”

He believes that there is so little appreciation of the long-term nature of the airline market and Qantas’ high standing in the global airline market that many of the opportunities that would pull the airline out of the red would not be taken.

“The Airline Partners Australia investors may be money-hungry, but stupid they are not – they see the international emerging opportunities in much the same light as Qantas CEO Geoff Dixon does”, meaning that change is critical to Qantas’ success.

It is the common belief of the public that the ‘national airline’ is a public utility with a duty to the public. This is also a belief that Harbison feels is holding the airline back. The belief that it is either government-controlled or 100% Australian-owned would cause the airline to “contract into a domestic airline and eventually be taken over by one of the post-2010 multinational airlines,” he predicts.

Either way, all that there is left to do is the wait for Federal Treasurer Peter Costello’s judgement on the matter. And a long wait it probably will be – in 2001, Costello took six months to reject the bid by oil Giant Shell for Australia’s Woodside Petroleum. All we have to say is: don’t hold your breath.
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