December 13, 2002
Air & Land Transport News
Open skies pact could aid Qantas-Air NZ tie-up
Aussie watchdog more likely to agree if pact is signed.
(SYDNEY) Australia's competition watchdog said yesterday it would be more receptive to a proposed alliance between Qantas and Air New Zealand if the Australian government signed an open skies pact with Singapore.
Singapore and Australian officials advanced plans for an open skies agreement during informal talks in Singapore on Wednesday.
The Australian Competition and Consumer Commission said an open skies deal with Singapore would affect the competitive environment surrounding the Qantas-Air New Zealand proposal.
'A more competitive environment of course is more conducive to us having no difficulties with the arrangement,' commissioner Ross Jones told AFP.
'If the commission thought there were some acceptable arrangements between Qantas and Air NZ, one of the crucial issues would be the ability of someone else to come in and compete on the routes where they dominate.
'That competition may not come domestically. In an open skies agreement there may well be carriers from other countries that can provide the competition.'
Last month, the airlines proposed an alliance in which Qantas would take a 22.5 per cent stake in Air NZ, creating a monopoly on the Tasman route between the two countries and opening a network of routes using Qantas' existing deal with British Airways. Mr Jones said it could take up to six months for the commission to make a decision.
Lending government support to a link-up, Australian Transport Minister John Anderson said the airline industry would consolidate into three to five dominant airline groups over the next 10 years.
'We must have one of those airline groups in this region because we are located far from the major trunk routes,' he said.
This week's move by US carrier United Airlines to file for Chapter 11 bankruptcy protection is also relevant to an open skies agreement and the Qantas-Air NZ deal. Mr Jones said the commission would seek United's opinion on the proposal.
'We are working on the assumption that while United has gone into Chapter 11, United will continue to fly in the Pacific and United will be a competitor,' he said, adding that if United ceased to be a player, 'that was a totally different circumstance'.
Airline analysts have said that in the absence of United, Qantas and Air NZ would be handed a monopoly on the Pacific route.
It is the second time in two years Singapore and Australia have explored an open-skies agreement, with the first round of talks in September 2000 stalled by disagreements.
If adopted, Singapore Airlines and Qantas will have unrestricted access between the two countries and beyond, eliminating restrictions on the number of flights and prices charged. - AFP
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