View Full Version : Harvey supports Qantas NZ play (Geoffrey Thomas)

8th Dec 2002, 04:59
Sat "The West Australian"

Harvey supports Qantas NZ play
By Geoffrey Thomas

HARVEY World Travel yesterday expressed support for the Qantas Airways and Air New Zealand equity tie-up, which will be put to regulators next week.

The major travel-agent chain said it did not expect airfares to rise in the near term if Qantas was allowed to buy into Air NZ.

The airlines will put their proposal to the Australian Competition and Consumer Commission and New Zealand's Commerce Commission on Monday.

Harvey World Travel claims the alliance is in the best interests of the travel industry and will be the catalyst for a new entrant, such as Virgin Blue, into the trans-Tasman market.

Last month, Qantas finally announced a deal to buy 22.5 per cent of Air NZ for $NZ550 million ($490 million) over three years, via the issue of new shares.

Harvey World Travel managing director Barry Mayo said it was in the best interests of the tourism and travel industries to have financially healthy airlines to avoid another collapse like Ansett.

Air NZ has been slowly moving along the path to recovery after the collapse of its subsidiary Ansett, which caused the biggest write-off in NZ history of $NZ1.43 billion. This year, the airline made a subsequent $NZ319 million net loss, after writing off another $NZ389 million, to take its total Ansett write-off to $NZ1.71 billion.

The loss to Ansett's unsecured creditors was about $2 billion.

"If fares were to go up, which Harvey World Travel does not foresee happening in the short term, this would not necessarily be bad for business, providing increases were modest, as it should enable the airlines to maintain the current high quality of service and frequency of flights," Mr Mayo said.

Industry analysts argue Qantas and Air NZ will be able to cut operational costs with the equity alliance by combining many flights and cutting out wasteful duplication, much as Qantas has done in Australia since the demise of Ansett.

Qantas has been able to use bigger, more economical aircraft such as 237-seat 767s and even 747s on many routes to keep fares lower.

However, Virgin Blue chief executive Brett Godfrey has called on the ACCC to block the "effective merger" of Qantas and Air NZ, claiming the deal is anti-competitive.

Mr Godfrey also claimed Virgin Blue would not fly to NZ if the deal went ahead.

Analysts suggest this is a very strange statement because Virgin Atlantic carved out its name by taking on giant British Airways on the world's toughest airline market - the North Atlantic.

"Virgin Blue is not a small operator and has massive backing from UK-based Virgin Holdings, owned by billionaire Sir Richard Branson and Patrick Corporation, which is capitalised at $2.5 billion." said one Sydney-based analyst.

"Flights between Sydney, Melbourne and Brisbane to Auckland, Wellington and Christchurch and then within New Zealand are ideal for Virgin Blue's style of operation.

"Besides, Virgin Blue now flies on all the major routes in Australia and viable expansion is limited to increasing frequency."

In a related development, Virgin Blue is expected to announce a order for up to 15 Boeing 737 jets, with 15 options, next week. The airline has 29 of the aircraft in service.

Virgin Blue will also announce next Thursday the introduction of lounges for business travellers at its major airports.

December 07, 2002

-with AAP