View Full Version : ACCC knocks back Air NZ/VB Merger

10th Sep 2010, 03:58
Reported in the New Zealand Herald at 12:44 today

Regulator knocks back Air NZ alliance bid - Business - NZ Herald News (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10672431)

Australia's antitrust regulator has knocked back a bid from Air New Zealand and Virgin Blue to forge an alliance on trans-Tasman routes.
In a draft determination, the Australian Competition & Consumer Commission said the alliance would probably boost the likelihood of coordinated conduct on routes between New Zealand and Australia with Virgin's Pacific Blue reining in its services.
"The ACCC considers that the alliance is likely to reduce competition in the market for trans-Tasman air passenger services," chairman Graeme Samuel said in a statement.
"More than one million passengers per year may be adversely affected by the removal of competition between Virgin Blue and Air New Zealand."
The airlines put forward the bid in May in response to Qantas Airways two-airline strategy where its low-fare Jetstar unit operates domestically in New Zealand and links to longer-haul flights on its parent. The tie-up required regulatory approval from the ACCC and New Zealand's Ministry of Transport.
Air NZ said it's reviewing the draft decision and will respond to the ACCC's concerns once they are identified.
Shares in New Zealand's national carrier fell 0.8 per cent to $1.25 in trading today, while Virgin Blue's stock sank 7 per cent to 40 Australian cents on the ASX.

10th Sep 2010, 08:09
Sooooo it's fine for QF to effectively run 2 airlines on the tasman, but not OK for Air NZ and VB to forge an alliance and actually have a fighting chance against the QF/JQ machine... :rolleyes:

Sounds a bit like a case of "do as I say, not as I do" from the ACCC. TYPICAL.

Can someone explain how this works

Mr. Hat
10th Sep 2010, 08:27
Bloody hell not a good week for VB.

What these regulators are failing to realise is that with fares only decreasing worldwide airlines have to find new ways to generate revenue.

Sounds like Mr Samuel enjoys some interesting perks from Qantas according to: http://blogs.crikey.com.au/planetalking/2010/09/10/virgin-blue’s-misadventures-in-price-fixing-club-land/

Would be good to see VB to lodge an official complaint and get all the dodgy boys deals out in the open.

air doris
10th Sep 2010, 08:36
I maybe wrong but whats the difference of QF/JQ operating AUS-NZ and DJ/Pac Blue operating it. Two subsideries within the same company. Again I might be wrong but wasn't a QF/NZ alliance denied a few years back. Same scenario to me.

Mr. Hat
10th Sep 2010, 08:52
Another way is get ANZ to buy out Branson and tell the ACCC to jam it. (and Singapore for that matter).

10th Sep 2010, 09:59
Not a surprising decision, especially in light of some of the other decisions from the west side of the Tasman regarding access to Australian skies.

One could be excused for thinking that like some previous decisions, Qantas had some influence in this decision.

wasn't a QF/NZ alliance denied a few years back. Same scenario to me.

Yes perhaps, but the dynamics were far different in that case WRT the collective dominance that QF/NZ would have had in the Tasman market.

10th Sep 2010, 11:29
First the pacific alliance with Delta fails, now the Tasman is off the agenda.... What will happen with the mid east???? Just as I suspected, this guy is good at the management talk but lacking on action to back it up. Perhaps he was overlooked by Q for a reason??!!??

You heard it here first, VB will be no more within 2 years..... If they keep steering in the current direction

10th Sep 2010, 12:56
The protected QANTAS yet again:ugh:

10th Sep 2010, 13:52
Just as I suspected, this guy is good at the management talk but lacking on action to back it up.

It's a little difficult to predict what decisions a particular government will come up with. I don't think you can entirely pin it on JB.

You heard it here first, VB will be no more within 2 years..... If they keep steering in the current direction

No they will still be here Voz might get the arse though if they can't get any tie ups. Such speculation is already being thrown around in a few commentaries on the matter

10th Sep 2010, 20:07
Hmmm... anyone who says that must have bad karma themselves..

Think there is some water to "go under the bridge" on this ACCC decision.

However, it's starting to appear the ACCC may have some prejudice or hidden agenders at play.

Maybe an all expenses paid, first class trip to the middle east again would smooth this out...... for fact finding purposes of course.

10th Sep 2010, 21:38
Bit rich VBPCGUY. Was it not DJ/PB that was protected by the same body a couple of years ago on the QF/ANZ tie up. QF did not even object to current plans. (at elast according to public statements)

DJ have been protected by the ACCC probably more than QF in the past decade. In the early post Ansett days QF could have and probably would have crushed DJ by dumping capacity and prices in the domestic arena. Take a loss to gain a monopoly, but alas the ACCC would not have allowed it for good reason. So it is a little bit rich to say they have been protected. Apart from stopping Singair from the pacific run, I find it hard to think of too many other examples of the Rat being protected. (I am Jet lagged though)

10th Sep 2010, 21:40
Don't expect a level playing field boys, this is business, last man standing wins!

11th Sep 2010, 21:31
Well there is agreement here that DJ built a very good domestic business and blew it on international. But it had to go international didn't it. The 777s were a very good idea, and from reading around, putting them on Joberg was a very stupid place to use them.

If some posters are right about the LAX route now making money that stupid move by the cockroaches was right to.

Reading other threads, it could be that DJ has less going wrong for it than QF.

12th Sep 2010, 03:58
I found these last paragraphs interesting:

The ACCC chairman, Graeme Samuel, this afternoon told ABC Radio that the main purpose of the Virgin Blue-Air NZ deal was to remove price competition between the two carriers. This is the same effect of course that will be achieved by Virgin Blue quitting the market, and leaving Air NZ out muscled by Qantas and Jetstar. The proposed deal would make it less likely that Qantas and Jetstar could dominate the trans Tasman market by their being countered by Virgin Blue and Air New Zealand.

Disapproving the deal means, perversely, the approving of a lessening of sustained competition on the routes, which is of significant benefit to Qantas, which would, as a consequence of the DoT ruling, also become entrenched as the only US or Australian carrier allowed to have a domestic feed for its trans Pacific flights at the Australian and US ends, the latter through its American Airlines deal.

Samuel is believed to remain an invited guest of the Qantas Chairman’s Lounge club rooms. He was asked this morning if it was appropriate that he continue to enjoy the benefits of that exclusive club and its hospitality at a time when he is making decisions that affect Qantas and its main Australian competitor.

The question has been ignored, twice. Samuel is a man of integrity, and can be expected to resign from the Chairman’s Lounge.

14th Sep 2010, 03:11
You're getting Qantas Club & Chairmans Lounge confused - the first may be full of "gimps" using your words however you won't find that in the Chairmans Lounge which is still invite only from the CEO.

14th Sep 2010, 08:05
Not happy with just the VB/ANZ alliance it seems.

Qantas opposes Virgin Blue-Etihad alliance
By Ghim-Lay Yeo ([email protected])

Qantas Airways has protested against plans by Australia's Virgin Blue (http://www.flightglobal.com/landingpage/virgin%20blue.html) and Middle Eastern carrier Etihad Airways (http://www.flightglobal.com/landingpage/etihad%20airways.html) to form an alliance, and has urged Australian regulators to not grant interim approval to the tie-up.
The Oneworld carrier says it is concerned the alliance could lead to "more widespread price coordination across the broad codeshare network", including on routes between Australia and Europe.
Virgin Blue and Etihad announced plans last month to join their networks and codeshare on flights between Australia and Abu Dhabi. The two carriers also plan to integrate their frequent flyer programmes.
In a submission to the Australian Competition and Consumer Commission, Qantas says that "it is not possible that the applicants will not also be coordinating prices between Australia and Europe".
"Since Abu Dhabi attracts only a small volume of point to point travel, the true value of the proposed alliance rests in access to international markets, and for Virgin Blue, the ability to offer services from Australia to UK / Europe," adds Qantas.
"The consequences of such coordination should be fully analysed before the applicants begin any cooperation."
Qantas and Etihad have an existing codesharing agreement on certain flights but Etihad's CEO James Hogan has said the partnership is too limited.
If interim approval is granted, Virgin Blue and Etihad will begin their partnership from 1 October. Virgin Blue customers will have access to Etihad's network of 65 destinations while Virgin Blue will offer 44 Asia-Pacific cities to Etihad passengers.

22nd Sep 2010, 15:41
I heard today that the ACCC has now knocked back the VB/Etihad partnership/alliance/codeshare (whatever it is being called this week).

Does anyone have any information to confirm or refute this?

23rd Sep 2010, 00:26
Incorrect - ACCC has given it the go ahead. Joint sales to start from October 1 with V Aust SYD-AUH to start in Feb 2011 subject to full approval and BNE-AUH for Feb 2012.

Red Jet
23rd Sep 2010, 00:58
BRISBANE 23 SEPTEMBER 2010: The Virgin Blue Group is pleased to announce that it has
received interim approval from the Australian Competition and Consumer Commission (ACCC)
for its alliance with Etihad Airways.
Virgin Blue Group CEO and Managing Director John Borghetti said the approval by the ACCC
meant the airlines would commence selling airfares between Australia and Abu Dhabi with
connections on Etihad’s extensive network from 1 October.
“The Virgin Blue Group of Airlines will now be able to deliver an alternative and competitive
network to the Middle East, Europe, United Kingdom and beyond.
“This is an important milestone as we create a global international network, greater
competition on the international landscape and benefit our guests with great value fares,
better scheduling and more choice.
Together, Etihad and V Australia will move towards a total of 27 weekly services between Abu
Dhabi and Australia – including double-daily services between Abu Dhabi and Sydney, daily
Melbourne-Abu Dhabi flights and six frequencies per week between Abu Dhabi and Brisbane.
Subject to obtaining final regulatory approval from the ACCC, V Australia will operate three
Sydney-Abu Dhabi services per week from February 2011 and three Brisbane-Abu Dhabi
services per week from February 2012, using its new fleet of three-class Boeing 777-300ER and
becoming the first Australian carrier to operate to the Middle East since 1991.
From 1 October, Virgin Blue Group customers can access Etihad’s network of 65 destinations
across North America, Europe, Asia, the Middle East and the Subcontinent. All Virgin Blue
Group services will be available to Etihad customers, opening up 45 destinations in Australia,
New Zealand and the Pacific Islands, and to Asia and Los Angeles.
The alliance also integrates the Etihad Guest and Velocity frequent flyer programs, allowing
members to earn status/tier points and frequent flyer points immediately along with reciprocal
service benefits and lounge access for top tier members of both programs. The ability for
members to burn miles on both carriers’ services comes into effect from 1 October.

23rd Sep 2010, 04:34
Ruling threat to 'Air NZ's future'

7:20 AM Thursday Sep 23, 2010

Air New Zealand chief executive Rob Fyfe says the Australian competition watchdog's draft determination to block an alliance with Virgin Blue Holdings Ltd would threaten the airline's future.
"If we are to earn the right to continue to fly and grow, then the deal with Virgin Blue is a central plank of that strategy," Fyfe said at a National Aviation Press Club lunch in Sydney yesterday.
"Obviously the ACCC's [Australian Competition and Consumer Commission] preliminary finding represents a threat to this strategy, in effect, a threat to our future."
Virgin Blue and Air New Zealand hope to form an alliance on transtasman services that would see the two carriers collaborate on pricing, revenue management, schedules, capacity and routes.

23rd Sep 2010, 14:37
Thanks for the information Red Jet. Better news than what I was told.

24th Sep 2010, 00:40
Thanks for the information Red Jet. Better news than what I was told

Were you reading the QF intranet??? The last dud rumor that came from there was a few years ago when they said VB had 3 weeks to live, its been a looooooonnnnnngggg three weeks.

The Green Goblin
24th Sep 2010, 00:54
There are not too many Australians who would feel sorry for Rob Fyfe bleating like a lamb, from a failed tieup attempt with VB on the Tasman.

We all have long memories :ok:

24th Sep 2010, 04:08
Were you reading the QF intranet???

No VBPCGUY, I wasn't. Don't have access to that. Mine was a real, fair dinkum rumour. You know the one - a friend of a friend's cousins girlfriend heard someone on the bus talking on their mobile, and told me at lunch the other day :hmm:

That's why I asked, Does anyone have any information to confirm or refute this?

24th Sep 2010, 08:55
We all have long memories Selective ones at that:ok::ok::ok:

24th Sep 2010, 09:33
GG, you may have a long memory but is it accurate. I read on here guys crapping on about this topic but I suspect not all the facts are known.

And no I'm not going to get into a discussion about it. Go do some proper research.

25th Sep 2010, 00:09
The GG is a classic xenophobe, any discussion with him/her regarding New Zealand or New Zealanders is a complete waste of time, dont believe me have a look at a few recent posts.

The Green Goblin
25th Sep 2010, 05:30
Not a xenophobe, just a realist :)

For the record my close friends are Kiwis and they know how it is, perhaps you should bite back and have a bit of fun with it.

As for ANZ, well, thats another story.

henry crun
25th Sep 2010, 07:32
Steady on Kiwis, don't be too hard on Green Goblin, he does at least provide some occasional light relief in this sea of moaning whinging Arsetralians known as D&G.

His more recent remark about his close friends being Kiwis is a quite funny variation on the old saying "I'm not a racist but...........".
Then there are his frequent attempts to put the Kiwi accent into print, which are so pathetic as to be quite hilarious.

25th Sep 2010, 15:19
Well put. A bit like listening to an American trying to put on an Australian accent. Cringworthy but you cant look away. Oprah was the latest.

Anyway, whats this about long memories, Goblin? What did Fyfe do that you cant let go of?