Fiji's military government on Wednesday seized control of national carrier Air Pacific from Australia's Qantas, issuing a decree preventing Fijian airlines being owned or controlled by foreigners.
The South Pacific nation's government, which took power in a 2006 coup, denied the move amounted to nationalisation, saying it corrected an anomaly that gave Qantas control of the carrier while having only a 46.3 percent stake.
"With this law, the... government has now corrected the activities of prior Fijian governments, which allowed foreign citizens to control Fiji's national airlines," the decree on the government's website said.
The government, which owns 51 percent of Air Pacific, has been in negotiations with Qantas to purchase the Australian carrier's stake since at least 2010 but talks have stalled over a price.
Qantas is reportedly demanding about $40 million from the cash-strapped Fiji government and has suggested a programme of asset sales at Air Pacific to help Suva meet the asking price.
The government denied the latest move was prompted by a failure to reach agreement over the Qantas stake, saying it needed to regain control of an asset vital to the country's struggling economy.
It said the Australian carrier had effective control of the airline "through supermajority and veto rights", giving rise to concerns about a potential conflict of interest.
"While Qantas currently has veto power over most areas of Air Pacific's operations and business decisions, Qantas also competes directly against Air Pacific through its wholly-owned low-cost carrier subsidiary, Jetstar," it said.
The government said the move was not a de facto nationalisation of Air Pacific as Qantas would retain its shareholding without the veto rights.
"That is absolutely false and misleading (to compare the decree to nationalisation)," it said. "Ownership of shares remains with Qantas, and dividends will be paid as and when declared."
No comment was immediately available from Qantas, which on Monday announced a joint venture with China Eastern Airlines for a new Hong Kong-based budget carrier next year aimed at cashing in on China's booming aviation market.© ANP/AFP