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Qantas, Tourism Australia fight escalates

The Qantas – Tourism Australia fight just stepped up a notch, with former Victorian premier Jeff Kennett calling for Tourism Australia chairman, Geoff Dixon to quit.

Here’s a quick recap for you.

Several prominent businessmen with a minority holding in Qantas Airways Limited (ASX: QAN) are agitating for change, including Geoff Dixon, who was the previous boss of the airline, before Alan Joyce.

Qantas announced that it was suspending its long-standing partnership with Tourism Australia, worth approximately $44 million over three years, over concerns that Mr Dixon had a potential conflict of interest, as a member of what the airline calls ‘a syndicate committed to unravelling the airline’s structure’. Qantas has instead decided to invest that money in state based tourism organisations.

The syndicate wants to float off Jetstar’s Asian franchises and a partial float of Qantas’ most profitable business, the Frequent Flyer program. They would also likely argue for Qantas to sell off its stake in troubled travel agent Jetset Travelworld Limited (ASX: JET).

Speaking to the Australian Financial Review, Mr Kennett said that it’s time for Mr Dixon to step down and stop agitating against Qantas. He added that Mr Dixon has had his opportunities with Qantas and those didn’t work, and he needs to back away from the business.

Fears the split between the two organisations will harm our tourism industry are rising. Perhaps unsurprisingly, the federal opposition has jumped on board, calling for the federal tourism minister to examine whether Tourism Australia is managing its commercial relationships in the national interest.

It’s likely in the best interests of all parties to resolve the issue as soon as possible, as it could damage  ‘brand Australia’ overseas. That would be bad news not just for Qantas, but its main competitor, Virgin Australia Holdings (ASX: VAH), as we could see the number of tourists coming to Australia drop.

Foolish takeaway

The sooner this issue is resolved the better – although at first glance it doesn’t appear likely to go away anytime soon. That raises the risk of more harm to Australia’s tourism industry.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.  The Motley Fool ’s purpose is to help the world invest, better.  Take Stock  is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  Click here now  to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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