Air Transport World

Sure-footed Kangaroo: under Geoff Dixon's leadership, Qantas has not wasted the opportunities created by the shutdown of Ansett and near-collapse of Air New Zealand. (Profile).

Geoff Dixon has hardly put a foot wrong in his 18 months at the helm of Qantas. Through a mixture of good management and good fortune, he has built an impressive record for a rookie CEO. As the international airline industry waded deep in red ink, Australia's flag carrier emerged as one of a select few to escape the economic doldrums and the turbulence of Sept. 11 with its profitability enhanced and balance sheet intact.

Dixon steered Qantas into an unassailable position in the Australian trunk-route and regional markets following Ansett's collapse last fall restructuring the business in the process, and took a calculated gamble by extending its domestic reach into New Zealand. Not everything went his way, however. While he won many friends through Qantas's rapid and effective response to the Ansett crisis, his rapier-like criticism of the competition regulator, the Australian Competition and Consumer Commission, led him into a very public confrontation with ACCC boss Allan Fels.

Indiscretions like that have been ruled out of the current game plan. Dixon's challenge now is not focused so much on the marketplace as on securing the support of "nonmarket forces"--the governments and regulatory agencies that hold the power of veto over developments crucial to the airline's immediate future. He is negotiating perhaps the most ambitious agenda ever undertaken by Qantas--one that, played right, will make it a regional powerhouse and consolidate it in the major leagues of world aviation.

In the coming months, the carrier hopes to realize the first of a possible series of new Asia/Pacific partnerships. Its first target, transtasman rival Air New Zealand, appears to be within its grasp subject to ongoing talks between the airlines and the approval of the New Zealand government.

A more intriguing but less likely partnership prospect is Star Alliance's Singapore Airlines, though recent moves in Singapore and Australia suggest the improbable may not be altogether impossible. Depending upon the outcome of Qantas's cat-and-mouse pursuit, there could be considerable implications for the balance of power in Australasia, the Asia-Europe market and beyond to the structure of regional and global airline alliances. Star Alliance, for one, will be watching intently.

On another important front, negotiations are entering a critical phase on the proposed relaxation or elimination of Qantas's foreign ownership limits in an attempt to gain freer, and cheaper, access to offshore capital. The federal government recently agreed to review the existing legislation and deliver an answer later this year. By opening up its funding options, the airline could accommodate more comfortably its A$ 10 billion expenditure program-largely for new short- and longhaul aircraft-over the next four years. Significantly, the door also would be opened for cross-equity relationships with other carriers should the opportuniry arise. …

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