Air NZ/QANTAS Alliance

[1279shp]

The legal dogfight over whether Air New Zealand and Qantas can team up resumes later today.

Lawyers from both airlines appear before the Australian Competition Tribunal.

They are seeking to overturn the Australian Competition and Consumer Commission ruling which blocks the deal.

Qantas wants to take a 22.5 percent stake in New Zealand's national carrier, a move supported by Air New Zealand.

The airlines claim the deal will not harm competition and will help them to survive in an increasingly competitive international market.

The ACCC and the New Zealand Commerce Commission have already turned down the request for an alliance.

Today's hearing in a Sydney court will be followed by further hearings later this month.

Even if the decision does go the airlines' way, they still need to overturn the New Zealand Commerce Commission's rejection of the deal.

A High Court hearing on that aspect, is not expected until July.

[Wirraway]

Wed "Melbourne Age"

Qantas makes NZ case to take on Pacific Blue
By Scott Rochfort
May 5, 2004

Qantas argued yesterday that Pacific Blue had already emerged as the "price leader" in the trans-Tasman aviation market, despite the Virgin Blue offshoot having just 5 per cent of the available passenger seats into New Zealand, and still steering clear of the main hub of Auckland.

On day two of the airline's bid to overturn the rejection of the Australian Competition and Consumer Commission of its proposed alliance with Air New Zealand, Qantas said Pacific Blue was even having an effect on air fares into New Zealand ports to which it did not fly.

Qantas's head of fleet, network and alliances, Paul Edwards, said that while Pacific Blue only called at Wellington and Christchurch, it was having an effect on flights across the board. Many travellers did not care whether they started or finished in Christchurch or in Auckland, he said.

During three hours of cross-examination by the ACCC, Mr Edwards conceded that Qantas's 22.5 per cent planned investment in Air NZ would take away the threat of a foreign rival taking a share in the NZ carrier.

Counsel for the ACCC, Rowan Dark, SC, said that as one element of the investment Qantas wanted to take away any risk of Air NZ (or its low-cost subsidiary Freedom) setting up a domestic airline in Australia, possibly in partnership with Singapore Airlines.

Pressed as to why Qantas needed to make an investment in Air NZ, instead of just forging a closer relationship, Mr Edwards said a 22.5 per cent stake would act as the "glue" in the alliance.

Meanwhile, Deputy Prime Minister John Anderson said he was confident the alliance would go ahead in some form.

- AAP

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