Qantas considers merger

Emily Pacey

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Australian airline "likely to merge by 2015" says Qantas boss

Qantas may merge with another airline in the next five to 10 years to combat tough trading conditions caused by aviation fuel hikes. Qantas chief executive Geoff Dixon announced the possible strategy one week after the Australian government gave the  airline clearance to merge with Singapore Airlines.

Dixon said on Sunday that an "association" with another airline was needed in the current aviation climate. However, he added that any future merger or association would involve two brands and dual listings, with Qantas retaining its name. Dixon stated that Singapore Airlines would make a good partner, but added that so would other carriers such as British Airways, Cathay Pacific and Air New Zealand.

His comments came as the Australian government considers whether to relax rules preventing overseas firms from taking over Qantas. Currently a foreign airline can only own up to 25% of the airline, rising to 35% for a group of overseas carriers.

Qantas is facing the threat of increased competition on the key Sydney to Los Angeles route as the Australian government is considering opening up access to the corridor. Singapore Airlines has already applied to fly the route, as has low-cost carrier Virgin Blue.

Qantas' plans for an earlier alliance with Air New Zealand fell through in 2003 after they were rejected by the New Zealand government.

The duty-free concession on board Qantas is held by Alpha Inflight Retail.