Govt supports plans for new airline in N.Z.

Press, 2 July 1986, Page 1

Govt supports plans for new airline in N.Z.

By

MARTIN FREETH

in Wellington

Plans for a new airline competing on domestic routes with Air New Zealand won general support from the Government yesterday.

The Minister of Transport, Mr Prebble, set down restrictions on foreign investment in New Zealand aviation which will not affect the proposal for the Australian airline, Ansett, to join Brierley Investments in a consortium to expand Newmans Air. In a statement to Parliament, Mr Prebble also welcomed the prospect of overseas expertise and capital coming into a competitive aviation industry. The statement provides guidelines for the Overseas Investment Commission which will soon consider an application for Ansett’s participation in the airline proposal. The venture passed one hurdle last week when the Commerce Commission decided to allow the consortium to take over the assets of Newmans Air. The proposal is for Ansett to become a 50 per cent partner in the consortium with Brierleys (up to 30 per cent) and Newmans Group (up to 22.5 per cent). The consortium

would expand Newmans Air to include main trunk domestic routes. Brierleys’ chief executive, Mr Paul Collins, said the consortium would satisfy the two specific conditions for foreign investment implied in the statement. Mr Prebble said the Government would not allow “shell” companies in aviation, which would be established domestically but function essentially as foreign airlines. “Any domestic aviation company must be essentially a New Zealand company,” he said. The second restriction was that no overseas airline would be able to own more than 50 per cent of a New Zealand company. Mr Prebble said this would apply until New Zealand airlines were able to Invest in the home country of a foreign airline flying in New Zealand. The Minister said that the commission would generally treat investment proposals in aviation in the same way it treated

any foreign investment application. It would consider the promotion of New Zealand’s economic growth, new competition for local industry, new job opportunities, and greater efficiency. However, all aviation investment proposals to the commission would be referred to the Minister of Civil Aviation as well as the Minister of Finance, Mr Prebble told Parliament. The Leader of the Opposition, Mr Bolger, attacked the statement in Parliament, saying it was designed to “fit Government policy ... in accord-. ance with the one proposal that is likely to come before the Overseas Investment Commission for the deregulated system of air licensing.” That was rejected by Mr Prebble who said the statement set down general guidelines for the commission. He also denied Opposition claims that they cut across the provisions of legislation now before

Parliament to liberalise air licensing. The Air Services Licensing Amendment Bill is intended to remove restrictions on foreign ownership of domestic airlines apart from the general regulations administered by the commission. Air New Zealand said that the rules outlined by Mr Prebble were ’’unfortunate, to say the least,” and that there would be far-reaching consequences for not only the company but for the stability of the whole aviation industry. ”A significant adverse financial impact on the airline is inevitable,” the company said in a statement released by its public affairs department. Air New Zealand said it would make strong representations to the Overseas Investment Commission because job opportunities would be reduced and costs in the long-term to the consumer would be higher with two airlines Further reports, page 2, 8