Pacific Beat

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Sky Wars
Qantas Shot Down in New Zealand's Unfriendly Skies

Showing the bravado of fighter pilots and the coyness of diplomats, the commanders of the region's leading airlines are battling for market supremacy-and possibly for long-term survival. With expansion on their minds, Qantas and Singapore Airlines are circling an ailing Air New Zealand and its capital-starved subsidiary Ansett, hoping to impress investors and trying to sweet-talk the political air-traffic controllers in Canberra and Wellington.

On June 14 a new craft hit radar screens. Arguing that Qantas and Air New Zealand had "very similar cultural values" and that a partnership "will give us some critical mass," Qantas ceo Geoff Dixon proposed that the Flying Kangaroo acquire a 25-49% stake in the Kiwi airline, while Singapore Airlines could take control of Ansett.

It's not clear how the deal was born: was it a ploy by bankers, a bureaucratic bungle or a competitor's trick? In any case, it looks as if Qantas underestimated both the soaring ambition of Singapore Airlines (a fledging regional airline in the '60s, it is now among the world's leading carriers) and New Zealand's ingrained distaste for Australian brashness. "The idea of New Zealand's national carrier being owned by Australia doesn't impress me," declared New Zealand Deputy Prime Minister Jim Anderton. So much for closer economic relations. Last week, Air New Zealand's board announced that it preferred a Singapore Airlines rescue plan under which the Asian giant would increase its 25% stake in Air New Zealand and give Ansett a life-saving injection of up to $A4 billion to upgrade its fleet.

As Qantas' share price tumbled in the wake of the Kiwi snub, a belligerent Dixon said Singapore Airlines was showing "imperialistic tendencies" and warned that its move on Air New Zealand was an attempt "to take an unprecedented level of influence over the competitiveness and structure of the aviation industry on both sides of the Tasman." Qantas also wondered aloud why it had been invited to pitch in the first place. "Singapore Airlines could have done this deal and we would never have known about it," a spokesman for the airline told Time. "Yet we were given the opportunity to be in the tent on this transaction. Our proposal is still on the table and we will continue to argue its merits."

While few observers think Qantas will carry the day, Singapore Airlines must still persuade both Canberra and Wellington to lift their 25% caps on foreign stakes in national carriers. Last Friday, Singapore Airlines chief Cheong Choong Kong emphasized the parlous state of Ansett when he met with Australian Prime Minister John Howard, who faces an election this year. Without Singapore's cash, the 13,000 mainly Australian jobs of the weakest link in regional aviation could be under threat.

Qantas's argument that the rise of a Singapore-owned superairline would ultimately hurt Australia's interests has support within Howard's government. His Kiwi counterpart, Helen Clark, is also in for a rough ride. Over the coming weeks, Clark's government will decide the fate of New Zealand's flag carrier, what domestic investors will salvage from their holdings in it, and how far the small nation can stretch the friendship with its closest ally and most important economic partner. Fasten your safety belts.

-By Tom Dusevic. With reporting by Daniel Williams/Sydney

Trouble on four legs
Dingo Dilemma
Since baby Azaria Chamberlain disappeared from a camp site at Uluru, in Central Australia, in 1980, many Australians have regarded dingoes as a public menace. That view was strengthened in April, when a group of the wild dogs mauled 9-year-old Clinton Gage to death at a camping ground on Fraser Island, off the southern Queensland coast.

The dimensions of the nature reserve's dingo menace became clearer last week, when state Environment Minister Dean Wells presented a report on the problem to the Queensland Parliament. It found that humans were at extreme or high risk from dingo attacks at eight Fraser Island campsites; there are an average of 46 dingo attacks on visitors to the island each year. Proposed control measures include increasing fines for feeding dingoes, restricting the length of visits, fencing off camp grounds and "hazing," or scaring the animals away with rifles, slingshots or paintball guns. Since Clinton's death, 31 of the island's estimated 200 dingoes have been culled despite protests from environmentalists and some Aboriginal groups; rangers have standing orders to kill any dingoes that act aggressively.

-By Leora Moldofsky