Singapore key to Qantas-NZ deal
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Singapore key to Qantas-NZ deal
Aug 30 "West Australian"
Singapore key to Qantas-NZ deal
By Geoffrey Thomas
SINGAPORE Airlines' aggressive plans to enter the Australia-US market by the end of the year are expected to sway competition watchdogs into approving the Qantas-Air New Zealand alliance, industry insiders claim.
Airline sources in Singapore yesterday said Singapore Airlines was well advanced on plans to launch a daily Sydney-to-Los Angeles flight before Christmas, building to twice daily by the middle of next year. The service would use 378-seat 747-400s and possibly 285-seat 777-200ER aircraft.
Services between Melbourne-Auckland and the US were expected to follow next year, the source said.
The plans are subject to the Australian and Singaporean governments signing off on an open-skies agreement next month.
Deputy Prime Minister and Transport Minister John Anderson is due to meet his counterpart late next month with a deal considered a formality.
Australian and NZ competition regulators considering the proposed $NZ550 million ($605 million) Qantas-Air NZ tie-up have been concerned at the lack of competition on Pacific routes. But Singapore Airlines' entry into the market would allay fears of a monopoly developing on the route.
Currently United Airlines, which is operating under Chapter 11 bankruptcy protection, competes with Qantas on the Sydney-Los Angeles route and Qantas competes with Air NZ on the Auckland-Los Angeles haul.
Airline executives and industry observers on both sides of the Tasman are optimistic that the objections raised by the Australian Competition and Consumer Commission (ACCC) and New Zealand Commerce Commission (NZCC) have been satisfied and approval will be forthcoming.
When both bodies issued their draft determinations in April, Emirates had not entered the market, while Virgin Blue, considered the key to the deal, was raising objections, maintaining a no-fly position if the alliance was approved.
Emirates has now launched services across the Tasman with fares as low as $399 return - 25 per cent less than Qantas and Air NZ's offerings - while Virgin Blue has told the NZCC that it approves of the alliances and will compete on both Trans-Tasman and NZ domestic routes.
Virgin Blue expects to start flying into New Zealand from October.
In the draft determinations handed down on April 10, competition regulators claimed that the alliance would cost NZ consumers $432 million in higher air fares.
However, the airlines have countered by arguing that fares will not rise above the inflation rate and that the alliance will generate economic benefits of $1.57 billion to Australia and NZ over five years, with direct savings up to $NZ450 million by the third year of the alliance.
According to the International Air Transport Association, airlines improve efficiency by 5 per cent every year through a range of measures.
Qantas and Air NZ have also promised not to increase prices on regulated city routes on the Tasman beyond airline cost base increases, and for market and fare segments to be agreed with the commission.
Both airlines have also undertaken to alter schedules to provide new entrants to Tasman routes access to facilities and services.
© 2003 West Australian Newspapers Limited
All Rights Reserved.
==========================================
Singapore key to Qantas-NZ deal
By Geoffrey Thomas
SINGAPORE Airlines' aggressive plans to enter the Australia-US market by the end of the year are expected to sway competition watchdogs into approving the Qantas-Air New Zealand alliance, industry insiders claim.
Airline sources in Singapore yesterday said Singapore Airlines was well advanced on plans to launch a daily Sydney-to-Los Angeles flight before Christmas, building to twice daily by the middle of next year. The service would use 378-seat 747-400s and possibly 285-seat 777-200ER aircraft.
Services between Melbourne-Auckland and the US were expected to follow next year, the source said.
The plans are subject to the Australian and Singaporean governments signing off on an open-skies agreement next month.
Deputy Prime Minister and Transport Minister John Anderson is due to meet his counterpart late next month with a deal considered a formality.
Australian and NZ competition regulators considering the proposed $NZ550 million ($605 million) Qantas-Air NZ tie-up have been concerned at the lack of competition on Pacific routes. But Singapore Airlines' entry into the market would allay fears of a monopoly developing on the route.
Currently United Airlines, which is operating under Chapter 11 bankruptcy protection, competes with Qantas on the Sydney-Los Angeles route and Qantas competes with Air NZ on the Auckland-Los Angeles haul.
Airline executives and industry observers on both sides of the Tasman are optimistic that the objections raised by the Australian Competition and Consumer Commission (ACCC) and New Zealand Commerce Commission (NZCC) have been satisfied and approval will be forthcoming.
When both bodies issued their draft determinations in April, Emirates had not entered the market, while Virgin Blue, considered the key to the deal, was raising objections, maintaining a no-fly position if the alliance was approved.
Emirates has now launched services across the Tasman with fares as low as $399 return - 25 per cent less than Qantas and Air NZ's offerings - while Virgin Blue has told the NZCC that it approves of the alliances and will compete on both Trans-Tasman and NZ domestic routes.
Virgin Blue expects to start flying into New Zealand from October.
In the draft determinations handed down on April 10, competition regulators claimed that the alliance would cost NZ consumers $432 million in higher air fares.
However, the airlines have countered by arguing that fares will not rise above the inflation rate and that the alliance will generate economic benefits of $1.57 billion to Australia and NZ over five years, with direct savings up to $NZ450 million by the third year of the alliance.
According to the International Air Transport Association, airlines improve efficiency by 5 per cent every year through a range of measures.
Qantas and Air NZ have also promised not to increase prices on regulated city routes on the Tasman beyond airline cost base increases, and for market and fare segments to be agreed with the commission.
Both airlines have also undertaken to alter schedules to provide new entrants to Tasman routes access to facilities and services.
© 2003 West Australian Newspapers Limited
All Rights Reserved.
==========================================
