The possibility of a QF+BA merger adds immense pressure onto Singapore Airlines, and its majority shareholder, Temasek Holdings, to execute an effective strategy to participate in airline consolidation.

But the most pressure on them comes from recent earlier news that Abu Dhabi wants to control Dubai based airline giant Emirates as part of the price for injecting tens of billions of dollars into the Dubai economy, which is exposed to the global financial crisis because of the importance of external investment loans.

Emirates, and the rapid rise of Dubai toward become the world’s leading super hub for airlines, is of even more interest to the Singaporeans and their dependence on Changi as the leading airline hub in SE Asia, than the possibility that BA and Qantas will emulate the successful consolidation of Air France and KLM.

Dubai, as a hub, is within non-stop flying distance of every major and minor western and eastern and African and Latin American city. It taps into the rising economies of eastern Europe and the states that were formally the resource rich central Asian provinces of the USSR more effectively than any other hub, and it has shown that it can seriously erode the role of Changi as a connecting airport for kangaroo route flights to Europe.

The game being played in the UAE before BA and Qantas came into clear view could see the merging of Abu Dhabi carrier Etihad with Dubai’s aggressively expanding carrier Emirates. That possibility is also driving a lot of strategic thinking in Qantas.

Singapore Airlines has so far been astonishingly unsuccessful in finding the ‘right’ investments. It bought 49% of Virgin Atlantic in 1999 and was done like a kebab, and wants out. It tried to buy control of the merged Air New Zealand/Ansett group and was fried. It was invited by Paul Keating to become what proved to be the dummy bidder for the original 25% stake in Qantas he sold to British Airways in 1992, and it has pursued, but so far not to a conclusion, what could become a very strategic stake in China Eastern, which dominates the hub at Shanghai.

Any possibility that Qantas and BA can put together a working deal would really exercise Singapore Airlines and the Singapore Government.

It makes its so far unsuccessful foray into Tiger Airways in Australia look irrelevant.

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