Published on Monday, June 20, 2005

Qantas-SIA merger?

Australia's trade minister is reported to have backed a merger between Qantas and Singapore Airlines.

Mark Vaile is quoted by News Ltd newspapers in Australia as saying Qantas faced serious commercial challenges and the government needed to ensure the airline was not exposed to unfair competition.

"My view is if (a merger) could occur then the government should not rule that out," he reportedly said. "Quite frankly, that is the direction that international aviation is moving in."

His comments came as Australia considers scrapping foreign investment rules governing Qantas as part of a broad review of aviation policy, Australia's Daily Telegraph reported.

Qantas CEO Peter Gregg is reported to have responded by saying: "We are very supportive of a regime in which consolidation can occur. It's happening in Europe, it's happening in Australia."

SIA is embroiled in a dispute with Qantas and the Australia authorities about  being barred access to trans-Pacific routes between Australia and the US. 

A merger between Qantas and SIA would have serious implications for arch rivals British Airways and Virgin Atlantic. BA has a partnership services agreement with Qantas on the 'kangaroo route' between the UK and Australia while SIA is a 49% shareholder in Virgin Atlantic, which recently launched its first flights to Australia.

Virgin Atlantic begins a code-share agreement with sister Australian carrier Virgin Blue next month, as reported by TravelMole.

Report by Phil Davies 

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