Mon "Courier Mail"
Harsh reality, Qantas tells ACCC
By Steve Creedy
13jan03
THE decision by United Airlines to axe services to New Zealand was driven by commercial rather than competitive considerations, Qantas said yesterday.
Acting Qantas chief executive Peter Gregg responded to comments that the move would increase the concerns of competition watchdogs. He said that, rather than worries about competition, the move highlighted concerns about the US carrier and the world aviation industry.
"United Airlines said its Auckland flight had suffered from falling passenger numbers and lower fares that made its services unprofitable," Mr Gregg said.
"This is the reality. Everyone should be wary of trying to socially engineer an artificial competitive outcome in the face of this reality."
Ross Jones of the Australian Competition and Consumer Commission said on Friday that the withdrawal of United would enhance concerns about competition across the Pacific.
The debt-laden US carrier, which is reorganising under Chapter 11 bankruptcy protection, made the shock announcement after the close of business in New Zealand on Friday.
But the airline reaffirmed its commitment to flights to the US from Sydney and Melbourne which are understood to be among the more profitable routes in its international network.
Qantas officials said that other US airlines or Singapore Airlines already had the rights to fly between Auckland and the US.
They say they would expect other airlines to start services on the route if they "see it as viable".
Qantas flies daily from Auckland to the US and operates more than 30 services each week across the Pacific.
Mr Gregg emphasised the importance of the US routes to Australian tourism and business and said the recent decision to invest in long-range Boeing 747-400ER aircraft underscored the airline's commitment to Pacific services.
Nonetheless, the decision might add impetus to discussions about an open-skies agreement that could allow Singapore Airlines to start services between Australia and the US.
The United decision comes as Cathay Pacific this weekend announced it had gained permission to code share to 20 US cities with Oneworld partner American Airlines.
The airline said the decision would allow its Australian customers to buy tickets using Cathay reservation codes on flights to major cities across the continent.