Now that Qantas+ BA has become Qantas-BA, what might be the next step?

The failure of the merger talks “at this point in time” to quote the Qantas statement is no surprise. There wasn’t a single analyst of adult age who believed it would work.

But given that Qantas is unlikely to stop scoping deals in which it can remove or neutralise a competitor, Air New Zealand may well be revisited.

The last time Qantas tried to crush the Kiwis the competition regulators on both sides of the Tasman said no. But ‘No’ may not be forever, and their are new governments in both countries and the competitive forces on the Australia-New Zealand routes are stronger and more numerous than ever, thanks in part at least to the original deal not going forward.

Air New Zealand is four fifths NZ government owned as a consequence of the Air New Zealand/Ansett fiasco of 2001. Wellington is an unwilling stakeholder. If Qantas doesn’t do a deal involving Air New Zealand someone else probably will, with Pacific Blue, Virgin Blue’s NZ subsidiary, looking at least on paper to be a potential suitor.

This would probably require a financial restructuring of the entire Virgin Blue enterprise, which is tracking very well on its domestic routes according to latest guidance.

The Trans Tasman routes will undoubtedly see consolidation in the shorter to medium term. Somewhere in Air New Zealand, Qantas and Virgin Blue there will be people working almost continuously on updated scenarios, either in response to a move by one of the other groups, or as a future initiative.

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