ABC News Online
Mon, Nov 25 2002 8:11 PM AEDT
Qantas-Air New Zealand deal under increased scrutiny
The proposed alliance between Air New Zealand and Qantas is coming under increasing scrutiny.
The Australian Competition and Consumer Commission (ACCC) says it will closely scrutinise the deal, while unions are worried about jobs and rival Virgin Blue says there is no benefit for travellers.
Both airlines say it will allow them to better compete in a tough aviation market.
But Virgin Blue's chief executive Brett Godfrey says it is anti-competitive and if it proceeds Virgin will postpone its plans to service New Zealand.
"New Zealand was very much in our forethoughts in terms of what we wanted to do but we also made it pretty clear we would not walk into a monopoly, he said.
"The Australian law says that if this lessons competition significantly or is not in the public interest, then it should not be allowed to go ahead.
"Now if it is deemed to be anti-competitive, then the next test is, it in fact in the public interest to let this go ahead.
"The only public interest served by this is the share holders. its definitely not in terms of the people who will be paying the tickets."
But Qantas chief executive Geoff Dixon says the alliance will be good for shareholders and customers.
"Just because you have, as someone said, a virtual monopoly does not mean that customers cannot benefit," he said.
Under the deal announced this morning, Qantas is to take a 22.5 per cent stake in Air New Zealand.
Air New Zealand was rescued from bankruptcy just over a year ago by the New Zealand Government, which was left holding more than 80 per cent of the airline.
Qantas says the new partnership will help both airlines retain their independence in an industry facing considerable and continuing difficulties and boost visitor numbers to each country by tens of thousands each year.
Qantas chief executive Geoff Dixon says the proposal will strengthen both airlines in a very tough global aviation market.
"Unless we are proactive and indeed creative in dealing with these pressures, both airlines I believe run the risk of being marginalised over time," he said.
While the chairman of Air New Zealand John Palmer has been quick to deny suggestions his airline is selling out.
"Both parties have given something and in return have gained many advantages that would simply not have been possible without such a strategic alliance."
The Federal Government says it has been assured no jobs will be lost to Australia if the deal goes ahead.
But Transport Minsiter John Anderson says the deal will have to demonstrate significant public benefit and not preclude other airlines from operating on the same routes before it is approved by the competition watchdog.
Mr Anderson says the Government supports any move that strengthens the aviation industry in the region.
Reservations
But the ACCC has reservations about the proposed alliance.
ACCC chairman Alan Fels has indicated he is not convinced the deal is a good thing.
"I think the parties, because the deal on the face of it reduces competition, will have to argue that there's substantial public benefit."
Virgin Blue is urging the ACCC to block the deal.
Meanwhile, the Australian Manufacturing Workers' Union is calling on Qantas to give an ironclad guarantee that jobs will be safe under the merger.
National Secretary Doug Cameron says he wants more than a verbal assurance about Australian jobs.
"We have had a terrible experience with Air New Zealand and Ansett," he said.
"We come very jaundiced to this merger after what Air New Zealand did with Ansett."
Ahead of the announcement, the commercial head at rival airline Virgin Blue, David Huttner, said his airline would be taking the issue up again with the Australian Competition and Consumer Commission (ACCC).
"We certainly don't see any consumer competition benefit by allowing such a deal to go ahead and we will be addressing it with the ACCC and their counterparts with New Zealand," Mr Huttner said.
The New Zealand market has been one of the possibilities considered by Virgin Blue.
"Because clearly the deal has no interest for the public - it's simply a good deal for the finance authorities in New Zealand, who bought into an airline that was nearly bankrupt and now is quite healthy," Mr Huttner said.
"And if they're healthy, why do they need to do the deal?"