slamer.
3rd Nov 2006, 07:15
Regulator Turns Down Air NZ-Qantas Deal
http://xtramsn.co.nz/homepage2/imageView/0,,6422453,00.jpeg
03/11/2006
NZPA
Qantas said on Friday that regulators had proposed to turn down a proposal to code share with Air New Zealand on trans-Tasman routes.
The Australian Competition and Consumer Commission (ACCC) said the plan would result only in limited public benefits, in the form of cost savings for the airlines.
It would also mean marginal improvements in "schedule spread, connectivity and frequent flyer options for consumers".
"Authorisation of the agreement would fundamentally change the competitive process on the trans-Tasman," ACCC chairman Graeme Samuel said.
The deal must also be approved by New Zealand Transport Minister Annette King. It was believed she was waiting for the ACCC draft ruling.
Air NZ said it would make comment shortly.
Qantas and Air NZ are the largest competitors on the trans-Tasman routes, accounting for around 80 percent of passengers between Australia and New Zealand.
Both operate wholly-owned "low cost carriers" - Jetstar and Freedom Air - in the market.
The ACCC said Qantas and Air NZ would continue to be constrained to some extent on the trans-Tasman by Virgin Blue and Emirates. But because these rivals faced impediments to further expansion on the route, they could not replace the competitive dynamic which would be lost through the code-sharing agreement.
"In these circumstances, the limited benefits from the agreement will not outweigh what the ACCC considers will be significant detriment to consumers in the form of higher prices and reduced travel options at key times."
Submissions to the ACCC's draft decision are being sought.
RESPONSE
Air New Zealand today said it was flabbergasted and astounded by the ACCC’s draft determination to turn down an application for a codeshare with Qantas on the Tasman.
Chief Financial Officer Rob McDonald says a preliminary review of the determination indicates several inconsistencies.
“Although we have only had a short amount of time to review the determination’s contents, we have already spotted flaws and we will be raising these with the ACCC before a final determination is made,” says Mr McDonald.
The proposed codeshare with Qantas is designed to remove excess capacity on the Tasman, while increasing frequency and maintaining everyday low fares.
“If the ACCC sticks with this determination – and let’s remember it has been proven to change its mind - it is potentially forcing Air New Zealand to make capacity and route decisions that will come at a significant cost to consumers. We cannot continue to fly the equivalent of 43 empty A320 aircraft across the Tasman daily. That’s 6300 empty seats every day.
http://xtramsn.co.nz/homepage2/imageView/0,,6422453,00.jpeg
03/11/2006
NZPA
Qantas said on Friday that regulators had proposed to turn down a proposal to code share with Air New Zealand on trans-Tasman routes.
The Australian Competition and Consumer Commission (ACCC) said the plan would result only in limited public benefits, in the form of cost savings for the airlines.
It would also mean marginal improvements in "schedule spread, connectivity and frequent flyer options for consumers".
"Authorisation of the agreement would fundamentally change the competitive process on the trans-Tasman," ACCC chairman Graeme Samuel said.
The deal must also be approved by New Zealand Transport Minister Annette King. It was believed she was waiting for the ACCC draft ruling.
Air NZ said it would make comment shortly.
Qantas and Air NZ are the largest competitors on the trans-Tasman routes, accounting for around 80 percent of passengers between Australia and New Zealand.
Both operate wholly-owned "low cost carriers" - Jetstar and Freedom Air - in the market.
The ACCC said Qantas and Air NZ would continue to be constrained to some extent on the trans-Tasman by Virgin Blue and Emirates. But because these rivals faced impediments to further expansion on the route, they could not replace the competitive dynamic which would be lost through the code-sharing agreement.
"In these circumstances, the limited benefits from the agreement will not outweigh what the ACCC considers will be significant detriment to consumers in the form of higher prices and reduced travel options at key times."
Submissions to the ACCC's draft decision are being sought.
RESPONSE
Air New Zealand today said it was flabbergasted and astounded by the ACCC’s draft determination to turn down an application for a codeshare with Qantas on the Tasman.
Chief Financial Officer Rob McDonald says a preliminary review of the determination indicates several inconsistencies.
“Although we have only had a short amount of time to review the determination’s contents, we have already spotted flaws and we will be raising these with the ACCC before a final determination is made,” says Mr McDonald.
The proposed codeshare with Qantas is designed to remove excess capacity on the Tasman, while increasing frequency and maintaining everyday low fares.
“If the ACCC sticks with this determination – and let’s remember it has been proven to change its mind - it is potentially forcing Air New Zealand to make capacity and route decisions that will come at a significant cost to consumers. We cannot continue to fly the equivalent of 43 empty A320 aircraft across the Tasman daily. That’s 6300 empty seats every day.