Qantas alliance with Air NZ ruled out
September 9, 2003
AUSTRALIA'S competition watchdog on Tuesday rejected a proposed alliance between Qantas Airways and Air New Zealand, ruling it was not in the public interest.
Graeme Samuel, chairman of the ACCC.
"The proposed alliance would be highly anticompetitive and offer little benefit to the Australian public," Australian Competition & Consumer Commission Chairman Graeme Samuel told reporters.
The two airlines said last November they would seek clearance from regulators in both countries for Qantas to buy a 22.5 per cent stake in Air New Zealand, injecting NZ$550 million into the ailing carrier.
The stake would have given Qantas two seats on Air New Zealand's board and let the companies combine some of their operations. Air New Zealand would also get one seat on the Qantas board.
Rival airlines, industry analysts and air freight companies criticized the plan, saying it would stifle competition. They said it could enhance Qantas' dominance of the Australian market and create a virtual monopoly in New Zealand and on services between the two countries.
The Australian regulator and its counterpart, the New Zealand Commerce Commission, both rejected the merger in draft rulings in April.
They said then that the merger as it had been proposed was anticompetitive and could lead to higher airfares and freight costs. They asked the airlines to present new arguments and plans.
In May, the two airlines announced new concessions including capping some airfares on routes between Australia and New Zealand and allowing a new entrant, mostly likely budget carrier Virgin Blue, "unimpeded access" to the market between the two countries and to the New Zealand domestic market.
The New Zealand competition watchdog is due to issue its final report later this month.
The New Zealand Government acknowledged industry concerns but had backed the deal, saying it was necessary to secure the local flag carrier's long-term viability as an international airline.
Air New Zealand almost collapsed in 2001 but was bailed out by the Government, which now owns 82 per cent of the carrier.
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Agence France-Presse