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Tesna Consortium bid for Ansett Australia.



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Parliament House, Canberra ACT 2600

Ph: 02 6277 7680 Email: john.anderson.mp@aph.gov.au Fax: 02 6273 4126

Tesna Consortium Bid for Ansett Australia

A257/2001 27th November 2001

The Government has now considered the final two proposals that the Tesna Consortium has put to us in support of their bid for Ansett Australia. Our decision today follows the meeting last week between Lindsay Fox, Solomon Lew and me.

Lindsay Fox and Solomon Lew sought the Government’s assistance on a number of issues. We have considered their requests sympathetically, because we are committed to maintaining competition in the aviation industry. The Government will not be investing taxpayers’ money in Ansett, nor will we be providing them with support that skews the market in their favour.

It is now up to Lindsay Fox and Solomon Lew to decide whether to proceed with their bid, and to complete negotiations with the Ansett administrators. Their bid does not require the Government’s formal approval.

The ACCC is already carrying out inquiries into a number of matters involving Qantas. The Commission is increasing its surveillance of the airline industry to ensure that none of the companies in the industry misuse their market power. It is also seeking submissions from interested parties about whether it should consider developing guidelines in relation to any anti-competitive conduct in the industry.

Qantas has advised the Government that it is prepared to enter into a code of conduct about its business decisions. Government officials are currently discussing the details of such a code with the airline.

Tesna will be able to compete for Federal Government travel contracts and, provided its bids are competitive, could expect to win Government contracts in proportion to its overall share of the market. Its share of Federal Government travel could be valued at up to $65 million per year if it achieves 25 percent of the market.

All Australian airlines will be given a fair chance to win new contracts and chief executives will be able to consider advance payment arrangements where they deliver demonstrable financial benefits to the taxpayer.

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Linfox is the joint owner of the company that leases Essendon Airport. The Government will exempt all of the general aviation airports, including Essendon, from the airline ownership provisions of the Airports Act.

We will make transitional regulations immediately and legislation will be introduced into Parliament early next year. Essendon Airport will remain a general aviation airport and Tesna will not be able to use it for scheduled services.

The Civil Aviation Safety Authority (CASA) will expedite Tesna’s safety approvals, including its Air Operators Certificate (AOC), and will do everything it can to meet the company’s timetable. The fast-track process will not compromise the safety of the travelling public.

Ansett employees who transfer to the new company will be covered by the Government’s General Employee Entitlements and Redundancy Scheme (GEERS). The scheme provides a safety net of full statutory entitlements and redundancy payments to the community standard of eight weeks for workers who are made redundant by an insolvent employer.

Tesna will have access to all of the international rights held by Ansett International, including its codeshare rights, subject of course to the company resuming its commercial arrangements with its partner airlines. The Japanese aeronautical authorities have confirmed that Tesna will be able to use Ansett’s slots at Kansei Airport (Osaka) and at Narita Airport (Tokyo) when the second runway is opened in May 2002.

The Government has protected Ansett’s slots at Sydney Airport, and there are sufficient slots available to meet Tesna’s operating requirements without disadvantaging other operators.

The Government has provided Australian airlines with third party war risk indemnity cover since the commercial insurance industry withdrew from the market. The Government will provide Tesna with war risk cover on the same basis as Qantas and Virgin Blue.

The Sydney Airports Corporation (SACL) and Ansett were partway through simplifying the lease agreement for its Sydney domestic terminal when the company went into administration. The Government will ensure that the simplified lease agreement is concluded in a timely manner. SACL concluded a simplified domestic terminal lease agreement with Qantas earlier this year.

The Government is confident that these measures will give Tesna every chance of success, without adversely affecting its competitors. The measures build on the support that we have provided Ansett over the last few months, including underwriting its tickets and guaranteeing the statutory entitlements of its employees, including redundancy payments up to the community standard of eight weeks.

Media contact: Robyn Bain 02 62777680 / 0408 027839