THE DISTILLERY: Crowded flight

Jotters highlight the tricky politics of the aviation world, with one saying John Borghetti has a tough job to keep the crowded Virgin register happy.

Virgin Australia boss John Borghetti has got what he wanted from the consumer watchdog – approval to buy a 60 per cent stake in Singapore Airlines-backed Tiger Australia. While he might also have wanted, or at least expected, the carrier to jump on board with a larger stake in the Australian flyer, now Virgin has to deal with a crowded register. Some headliner commentators investigate.

Also in this Friday's double shot from The Distillery, Wednesday's CPI numbers get a lookover after Thursday's break for ANZAC Day. Let's begin.

Fairfax's Elizabeth Knight equates the Virgin Australia register to a family, which sounds very nice. But anyone with a family will know to be thankful for the love and security – assuming it's a happy family – and quietly resentful at the same time for the politics and drama that inevitably goes along with them.

"Virgin Australia chief executive John Borghetti has his own corporate family – his four alliance airline partners of which three have equity stakes in the Australian airline. Keeping them all happy will be stretching even Borghetti's diplomatic skills...Etihad's particular beef is that Singapore didn't buy its stake on market. Instead it picked up the 10 per cent from Virgin Australia's founding shareholder, Richard Branson."

Have your beef Etihad. As Fairfax's Matt O'Sullivan says, it was the path of least resistence for the Singaporean carrier.

"...Etihad boss James Hogan has made no secret of the fact that he wanted to increase his holding in Virgin. Given Virgin shares are tightly held, it would be tough to soak up a large slab of stock on market. So the only logical path would have been Branson, and Singapore has moved in first."

Along similar lines, Business Spectator's Stephen Bartholomeusz believes Borghetti might have been surprised at the timing of the move, but not the move itself.

"While Virgin Australia apparently wasn’t given any warning that Branson was about to sell a big slice of his shareholding to the Singapore-based carrier, Borghetti would have been well aware that both Singapore Airlines and Etihad had been talking to Branson. Now that Singapore Airlines has secured as much of the Branson stake as it can without having to launch a takeover offer, and Branson has finally demonstrated that he is a seller of his Virgin Australia shareholding, Hogan will have to ponder whether matching the Singapore Airlines stake would actually deliver him any strategic benefit, given the other strands to Virgin Australia’s relationship with Singapore Airlines."

Now that we've established that Singapore Airlines has in fact taken a larger stake in Virgin Australia from Richard Branson and the timing is just oh-so-sexy, The Australian's John Durie explains how this is undoubtedly awkward, but absolutely necessary for a modern operator.

"John Borghetti has laid a strong platform to build a virtual international airline network and, with the big strategic moves made, it's now down to execution to slowly but surely take domestic market share from Qantas. Yesterday's $122.6 million investment from Singapore Airlines to increase its stake to just under 20 per cent was yet another ringing endorsement of Borghetti's virtual international network strategy. Alliance partners are the norm in the aviation industry, but getting them to invest equity in your airline takes this to a whole new level. The industry has changed somewhat from the days when PanAm and TWA ruled the world."

The other big news to land before the pedestrian performance by Collingwood on one of us nation's most sacred days – lest we forget, whether it’s the fallen, the returned, or the still serving – was the latest consumer price index numbers, which have got some thinkers thinking the Reserve Bank will be cutting in May.

The Herald Sun's Terry McCrann, a seasoned watcher of the Reserve Bank, thinks maybe – but maybe not.

"Again simply, the low inflation numbers opened the door to Glenn Stevens and the Reserve Bank to cut rates, but it's a much more complicated question whether he and the board will choose to walk through it. Or walk through it yet. Although it's pretty reasonable to conclude that if he ends up recommending a rate cut, the board will agree to it. Normally, that recommendation decision would have been made yesterday. Because most times, the quarterly CPI data from the Australian Bureau of Statistics surfaces on the Wednesday before the following Tuesday's Reserve Bank board meeting. And Reserve Bank management caucuses on that Wednesday afternoon to decide the recommendation which then gets sent to the external bank directors the next day."

See what I mean? This guy knows the Reserve Bank. Anyway, Fairfax's Malcolm Maiden says you can actually find some not-so-good news in the data if you look for it.

"There is a longer-term inflation signal hidden inside the trading price result...Prices of traded goods are down mainly because the Australian dollar is stubbornly high: they will rise when the Australian dollar falls. Wednesday's CPI numbers were much better than expected – market economists were expecting a 0.7 per cent March quarter rise – and they give the central bank plenty of headroom. The Australian dollar fell by about half a US cent just after the CPI result came out on that thinking, but a rate cut when the Reserve next meets on May 7 is far from assured."

The Australian Financial Review's David Bassenese similarly acknowledges the lower-than-expected reading from the CPI – and I'm sure you can hear the 'but' coming.

"But while the CPI result was good, it was not good enough to cement the case for a rate cut at the Bank’s next board meeting in early May. Critically though, low inflation effectively places a safety net under the economy as it transitions away from the mining investment boom, and is great news for the housing sector in particular. Whereas the Reserve bank was once loath to see a stronger housing sector due to the mining boom, it is now counting on a faster pace of home building and even modest further growth in house prices to help support the economy."

In other news, Fairfax's Maiden writes this morning that Australian banks have booked Apple-like gains in the last five years for shareholders, if you include dividend payouts.

The Australian's Barry Fitzgerald brings word from iron ore giant Vale, which dismisses predictions of a second-half slide in the iron ore price.

In company news closer to home, The Australian's Bryan Frith says Equity Trustees probably needs to sweeten its merger proposal for Trust Company just a little, with independent expert Lonergan Edwards concluding it isn't unfair, but "reasonable".

Elsewhere, The Australian's Asia-Pacific editor Rowan Callick complains about the simple answers Chinese 'experts' give on the economy in response to very serious questions.

The Australian's economics correspondent Adam Creighton says the opposition's paid parental leave scheme creates damaging incentives and will have a prohibitive impact on childcare costs.

And finally, The Australian Financial Review's Chanticleer columnist Tony Boyd runs through the Coalition's national broadband network policy, while throwing in the possibility of using a technology known as 'pico cells'. Check it out.

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