Qantas deal 'a must'- the Minister for Qantas

[Airtart]

By Luke McIlveen and Steve Lewis
May 01, 2003

DEPUTY Prime Minister John Anderson will personally intervene to win regulatory approval for a $500 million trans-Tasman alliance between Qantas and Air New Zealand, a move described as "highly anti-competitive" by competition watchdog Allan Fels.

Mr Anderson last night revealed he would attempt to persuade the Australian Competition and Consumer Commission to overturn its rejection of the proposed alliance on the basis that a strong regional airline was in the national interest.

"It is in the national interest and therefore in the public interest for this region to have a strong and viable airline group that can sustain the current volatile aviation market now and in the future," Mr Anderson said.

"This proposed alliance is a potential first step in ensuring that this occurs."

Mr Anderson did not rule out canvassing new legislation to push through the alliance but would prefer to write to the commission first to request that the deal be allowed.

A spokesman for Mr Anderson said he would recommend to both Qantas and Air New Zealand that a more expansive list of undertakings be submitted to the ACCC. "We think they should come back with modified proposals that are more competitive," the spokesman said.

Professor Fels last night told The Australian: "There are established processes for the Government to make a public submission if they wish.

"The commission would consider the submission, but in the end the (Trade Practices) Act requires the commission to make its own independent decision on whether the alliance would be in the public interest," Professor Fels said.

In an interim report handed down on April 10, Professor Fels rejected Qantas's plan to buy a 22.5 per cent stake of Air New Zealand, saying the proposal was anti-competitive and likely to result in fare increases.

He said: "Passengers would be denied choice and increased airfares would be inevitable. The proposal would likely result in a substantial lessening of competition in a number of markets."

His remarks were backed up by the New Zealand Commerce Commission, which found the alliance would "likely result in a substantial lessening of competition".

Their findings drew fierce protests from Qantas chief executive Geoff Dixon, who said the aviation industry was in financial crisis.

"It is surely in the interests of both New Zealand and Australia to have viable competitive airline systems," Mr Dixon said.

"This will not be advanced by competition authorities ignoring the realities of the world."

The Australian

[Buster Hyman]

What a PRlCK!!!

How much stronger would QF be if ANZ collapsed? You'd get the same result AND maintain the standard you set with AN's collapse!

Backbench for you fool!:mad:

[Al E. Vator]

Could it be that like 2 other Pigs At The Trough (Bill Kelty and R.J. Hawke), Mr. Anderson has his eyes on business coming his way from Qantas after he leaves politics, or perhaps even a seat on the board?

[TheNightOwl]

Too right, Al, that's what I've been claiming since his performance during the AN debacle. He is securing his position on the QF board once he has been in politics long enough to qualify for future benefits at our expense, then on to QF for Staff Travel! Belts and braces, eh?
Your comment describes him perfectly, Buster, but there's no way he'll see the back bench, not as long as Little Johnny's in charge.

Kind regards,

TheNightOwl.:*

[Torres]

Yes, he's true to form. :yuk:

His Government sets the rules then doesn't like it when the rules don't work in his favour.

Pity he isn't so keen on seeing a strong GA and independant regional airline network in Australia. :*

[Icarus2001]

"It is surely in the interests of both New Zealand and Australia to have viable competitive airline systems," Mr Dixon said.

Competitive. Hello, anyone there?

[Airtart]

NZ's Commerce Commission has extended its deadline for submissions on a proposed alliance between Qantas and Air New Zealand, with the news boosting Qantas shares.

The competition watchdog said all parties would get more time to make submissions on its Air NZ-Qantas draft determination.

Qantas shares closed 14c higher at $3.18, adding to the previous day's strong gains. On Monday, the airline's stock dropped 15c to $2.85, its lowest since September 2001.

The watchdog expects to make its final determination in September, with the deadline for submissions now June 20.

Shaw Stockbroking research director Scott Marshall said the six-week extension was encouraging.

"They're certainly not closed in their mind on what their decision is going to be," he said.

Under the $500 million deal, Qantas would take a 22.5 per cent stake in Air NZ, with the two carriers forming a code share agreement.

[Buster Hyman]

$500million for 22.5% of a government run airline!!!:eek: :eek:

I bet Rivkin is saying Sell, sell, SELL!!!!

[Eastwest Loco]

The only thing worth doodly squat about NZ is it's people, and Pacific basin network.

QF must have eyes on codesharing (and not having to use their own people or rescources) into Pacific basin ports - like now not operating one single rat into PPT - all codeshare on TN (kinda spooky that).

NZ would also no doubt be forced to relinquish Star Alliance membership and that would leave a gaping hole in their global network, as serious as the hole in the One world network left after AC swallowed CP on the Canadian scene.

I can smell an SQesque plot here. Invest 500 mil - watch it collapse and step in with the 5th freedom rights granted through codeshares. If not for 9/11 Aussie domestic skies may have been a little different today.

Instant intra Pacific network for Australian or mainline according to market, and closure of the QF worldwide network over LAX to FRA and LHR.

Methinks the Rat does not want partial NZ ownership for it's potential profit, but to be in the box seat for a meltdown and the associated spoils.

Poor Air Tahiti Niui may see the shortest codeshare relationship in living memory.

Maybe Rene is actually saying buy buy buy.

Best all

EWL

[Wirraway]

www.virginblue.com.au

1st May 2003

Virgin Blue Reaffirms Its Views On QF-NZ

Open Letter to the Editors of the media as well as the respective regulators and governments in both Australia and New Zealand

Virgin Blue notes the articles based on the Qantas Media Release dated 29 April 2003 titled ‘Qantas to Lodge Submission on Air NZ Alliance.’

The release contained a number of statements including the comment attributed to the CEO of Qantas stating that “...just about every independent expert and commentator” supports Qantas’s views on the alliance and “Only the ACCC appears to think differently.”

It is regrettable that this suggestion is contradicted by hundreds of pages of submissions and reams of newspaper commentary from both sides of the Tasman.

Furthermore, the release went on to make the statement that “Virgin Blue has stated unequivocally that it will enter the trans-Tasman and domestic New Zealand Markets and be a significant competitor.”

Unfortunately the author of the statement chose not to highlight one of the key points of the Virgin Blue submission to the regulators – that Virgin Blue can only achieve such an outcome if Qantas and Air New Zealand are stopped from employing their most anti-competitive, low-cost products to target the routes we hope to fly.

Furthermore, we must have access to comparable facilities at competitive prices at the times of day when the public prefers to travel. Otherwise, it would be impossible to offer New Zealanders the same type of low fare competition that exists in Australia if we have no place to park the aircraft or check in passengers.

While we note Qantas and Air New Zealand’s sudden concerns for our well-being, Virgin Blue believes that the potential alliance partners could better spend time by addressing the core issues highlighted by the regulators that must be addressed if their proposal is to be allowed to move forward.

Continued posturing, legal manoeuvres and selective paraphrasing of Virgin Blue’s opinions will not address the anti-competitive issues or the needs of all travellers of Australia and New Zealand.

Instead of speculating as to what Virgin Blue needs to compete, Air New Zealand and Qantas only need to refer to Virgin Blue’s submission as well as the regulator’s draft decisions to deliver an outcome that will allow for sustainable competition.

We have clearly articulated our position that can be reviewed by anyone simply by clicking www.virginblue.com.au.

As long as Qantas and Air New Zealand are able to satisfactorily address the real anti-competitive issues we have identified, Virgin Blue has no intention of standing in the way of whatever these two traditional carriers deem necessary for their long term survival.

[qfpaypacket]

"that Virgin Blue can only achieve such an outcome if Qantas and Air New Zealand are stopped from employing their most anti-competitive, low-cost products to target the routes we hope to fly."

I am so sick of this company. The above quote sums it up for me. Virgin's main business edge is to underpay workers and take maitanence short cuts. How they still manage to garner any loyalty amongst their employees is a tribute to their internal marketing and the desperation of their employees. I would be embarrassed to work for them. I am embarrassed to be in the same industry.

[payload777]

All Virgin seem to do is complain about anything and everything Qantas does. They go running to the ACCC whenever it does not suit them so they can turn around and to try and steal the market and basically undercut Qantas (sound familar and everyone knows what happens to these companies) Anyone who runs a business tries to make it successful, secure for its employees and profitable. This industry is not just about giving the cheapest airfares and been "competitive". It is also about running a stable business and keeping people in jobs. Does Alan Fels want it to be like GA where you dont know if you have a job in a weeks time!!

[TeaCup]

Question for EastWest Loco,

You Said "I can smell an SQesque plot here. Invest 500 mil - watch it collapse and step in with the 5th freedom rights granted through codeshares. "

Iam not up to speed on the ins and outs of code sharing, What the 5th freedom rights???

TeaCup,

[Capn Laptop]

QFpaypacket,

The name says it all really!

Would you like to expand on your allegations of maintenance short cuts?

I think you will find that the maintenance is as good or better than that done at QF - ALAEA grandstanding aside.

[Z Force]

Can't recollect Qantas ever leaving a pitot tube cover on.

[Eastwest Loco]

teacup

5th frredom rights involve originating traffic rights between 2 countries, neither of which is the country of origin of the carrier involved. For instance, it is possible to fly Taipei Los Angeles on Singapore Airlines or Jakarta Singapore on Cathay Pathetic.

The same applies to Qantas Auckland Los Angeles and Air New Zealand Sydney LA.

Regards

EWL

[Sly'n Smiley]

Yeah, I cant remember hearing about Virgin Blue placing an aircraft on line with no static inverter(B747 SYD-LAX), or dispatching an aicraft for a long overwater flight with no life-rafts(B737 MEL to CCH), yet these are 2 stunts that QF have pulled in the past. No organisation is perfect and ALL humans make mistakes; the idea is to build systems in which there are layers of redundancies that 'absorb' human error. All this nah-nah -nah stuff is infantile and counter productive. :suspect:

[Wirraway]

Mon "Australian Financial Review" 5/5/03

Costello tells Anderson off over Qantas
May 5
Toni O'Loughlin

Federal Treasurer Peter Costello warned Transport Minister and Deputy Prime Minister John Anderson yesterday against pressuring the Australian Competition and Consumer Commission into approving a merger between Qantas and Air New Zealand.


Mr Costello said Qantas and Air New Zealand had to change the original merger proposal to ensure competition would not be undermined.

"I don't think the proper way to progress this is to try and heavy the regulator," Mr Costello said, alluding to comments by Mr Anderson and NSW Premier Bob Carr that the merger was vital.

"The proper way to progress this is to try and make sure that structural improvements and undertakings can be given which will guarantee competition," Mr Costello told Channel 10's Meet the Press.

In particular, Qantas and Air New Zealand had to reassure the ACCC "that the consumer will not be slugged" with higher prices, Mr Costello said.

His comments follow those of ACCC chairman Allan Fels who said last week that he would not succumb to political pressure.

Nevertheless, Mr Anderson continued to urge the ACCC to take into account the view that "further alliances ... of international aviation players is inevitable".

"We have a chance in this region to secure a major player," he told Channel 9's Sunday program.

Qantas was doing well at the moment but "it's a dog-eat-dog world in international aviation", Mr Anderson said.

However, he said he did not believe Professor Fels would continue to rule it out unless he had good grounds for doing so.

The ACCC and its counterpart, the New Zealand Commerce Commission, rejected the proposed merger last month in a draft determination, arguing that the anti-competitive effect would have outweighed any public benefit from the deal.

Qantas and Air New Zealand are in the process of reapplying for a formal determination.

[Z Force]

Good come back Sly. But at least Qantas doesn't have CASA breathing down their necks.

[Airtart]

By Steve Creedy, Aviation writer
May 10, 2003

QANTAS is prepared to cap prices on some routes if the Australian Competition and Consumer Commission allows its $500 million alliance with Air New Zealand to proceed.

The new offer was contained in a submission the airline planned to file with the ACCC last night in an attempt to overturn a draft determination rejecting its bid to take a 22.5 per cent stake in Air NZ.

Details of the filing will not be available until Monday but a Qantas spokesman said the airline was prepared to make "a new undertaking relating to pricing and a stronger and more substantial undertaking relating to capacity, facilities and services".

The pricing undertakings are understood to relate to trans-Tasman or New Zealand domestic routes, where the alliance will hold a monopoly.

The airline is also prepared to extend the timeframes in which its undertakings will apply.

The submission highlights a range of issues, including the effect of continuing problems in the aviation industry on both airlines and the likely contraction of Air NZ's international operations if the deal does not proceed.

It also notes Virgin Blue's intention to enter the trans-Tasman and domestic New Zealand markets and argues "real and substantial benefits" will flow from the alliance.

Qantas had previously offered a conditional moratorium on attacking trans-Tasman rivals, provision of facilities for up to 12 months and a promise not to reduce capacity on monopoly routes for two years.

But the ACCC found the harm caused by the deal's "highly anti-competitive" nature outweighed any benefits from the alliance.

ACCC chairman Allan Fels left little room for further negotiations when he said it was difficult to envisage what further undertakings could be offered to meet the watchdog's concerns.

His remarks were backed up by the New Zealand Commerce Commission, which found the alliance would "likely result in a substantial lessening of competition".

The NZCC calculated the alliance would cost its public up to $NZ401 million ($365 million) in lost productivity and efficiency.

Qantas has asked the ACCC to finalise its draft determination as soon as possible so the airline can, if necessary, lodge an appeal with the Australian Competition Tribunal.

Even if successful, an appeal could delay the deal for up 12 months and federal Transport Minister John Anderson has not ruled out new legislation to push through the alliance.

Qantas and partner British Airways warned in a separate submission that they would probably cut flights on the "kangaroo route" between Sydney and London if the ACCC did not renew a joint services agreement that allowed them to fix prices and share profits.

"Passengers would be denied choice and increased air fares would be inevitable. The proposal would likely result in a substantial lessening of competition in a number of markets."

[Airtart]

May 13, 2003

AIR New Zealand and Qantas Airways have agreed to restrict fare hikes among a raft of undertakings in a bid to win regulator approval for their alliance.

The duo said these were "substantial concessions" after regulators in New Zealand and Australia last month blocked a plan by Qantas to pay NZ$550 million ($317 million) for a 22.5 per cent stake in Air New Zealand, referring to it as "anti-competitive".

Air New Zealand managing director Ralph Norris said the undertakings were a considerable expansion in both extent and detail to the original submissions.

He said the submission was designed to give the ACCC "additional comfort that prices will not be increased as a result of the alliance".

The duo plans to restrict increases on some Tasman fares for up to five years.

The revised undertaking provided to the ACCC last Friday night would give a new entrant – most likely Virgin Blue – access to the trans-Tasman and domestic NZ market.

The offer means access to gates, slots, counter facilities, maintenance and ground handling.

The 10 latest undertakings to the ACCC include – ensuring no increases in the alliance's combined capacity on any route for 18 months following a new entrant announcing its intention to enter the route.

The pair would agree that Air NZ's discount carrier Freedom Air cannot operate direct services between main gateways in Australia (Sydney, Melbourne and Brisbane) and in New Zealand (Auckland, Wellington and Christchurch) once a new entrant commenced operations on that sector.

This condition would run for three years after the alliance was approved.

But Freedom would continue to operate from the main gateways to secondary airports in the other country.

Freedom has also undertaken not to operate domestic New Zealand flights between Auckland, Wellington and Christchurch.

Freedom's Tasman Fleet, (currently four aircraft) would not grow by more than one aircraft per year.

The alliance also plans to lease up to four B737-300's to a new entrant on normal commercial terms to ensure that they have the critical mass for substantial and effective market entry.

Qantas and Air New Zealand would not reduce capacity on Tasman city pairs or between Auckland, Wellington and Christchurch in domestic New Zealand unless load factors fall below 70 per cent or yields fall for three consecutive months – for up to five years from the approval of the alliance.

Qantas and Air New Zealand undertake to commence operating eight weekly flights (four return services) between Auckland and Adelaide within one year of the approval of the alliance, plus two weekly flights (one return service) on each of the following city pairs within one year of the approval of the alliance: Auckland-Hobart, Wellington-Canberra and Auckland-Canberra.

Air New Zealand and Qantas woud spend an additional $5.4 million on a new business plan for Qantas Holidays to generate an additional 50,000 tourists to New Zealand.

This includes $1.75 million spent in conjunction with national and regional tourism bodies.

The alliance would operate two return night freight services per week from Auckland to Australia and Christchurch to Australia with wide-bodied aircraft.

Air New Zealand and Qantas said they are continuing to work on their substantive response to the New Zealand Commerce Commission's draft determination.

This submission, which includes responses to 67 questions will be submitted to the NZCC by June 20.

The ACCC was looking for a deal that satisfied competition needs on capacity, pricing and facilitating the entry of new competitors on trans-Tasman and domestic NZ routes.

Transport Minister John Anderson said the alliance was crucial to Qantas' future given the dire trading conditions facing airlines worldwide.

The international airline industry has been devastated by global economic downturn, continuing fallout from terrorist attacks in the United States, Bali and elsewhere and more recently by war in Iraq and the Severe Acute Respiratory Syndrome outbreak.

with AAP, AFP

[Wirraway]

Wed "The Dominion Post"

Virgin Blue rejects new deal
14 May 2003
By ROELAND van den BERGH

A revised proposal by Air New Zealand and Qantas, supporting their bid for an alliance, fails to ease concerns about possible erosion of competition, Virgin Blue says.


The budget carrier, which has aspirations of operating here, again demanded the sale of Air New Zealand subsidiary Freedom Air before it supports the planned alliance. It also said it could be flying a limited service to New Zealand before the alliance approval process is completed.


Virgin Blue's commercial operations head, David Huttner, said yesterday the capacity and fare restrictions would be too difficult to police.

The sale of budget arm Freedom was the key to the alliance being approved, because it would give Virgin Blue an immediate foothold in the market, he said.

However, Air New Zealand's revised submission says it would be difficult to sell Freedom – an integral part of operations and not a viable stand-alone entity.

Instead, leasing a new entrant up to four Boeing 737-300 jets would "ensure that they have critical mass for a substantial and effective market entry".

Freedom would not operate on domestic New Zealand routes and would stop flying between the biggest airports on the Tasman routes.

Any jets leased to a new competitor would be at market rates "based on those then paid by Freedom".

The four aircraft would come from the alliance's combined fleet after Air New Zealand took delivery of its first batch of new Airbus A320 aircraft in the last three months of this year, Air New Zealand spokesman Glen Sowry said.

The airline was not planning to lease out its Freedom operation to a competitor, Mr Sowry said.

However, the jet lease offer was dismissed by Mr Huttner as Air New Zealand seeking to off-load surplus planes.

The concessions would end as soon as Virgin Blue operated 10 aircraft on the Tasman and within New Zealand, he said.

"The management of Air New Zealand keeps sticking its head in the sand over the core issues." The deal remained "hugely anti-competitive". He expected it to get the regulatory thumbs-down across the Tasman and be eventually appealed to the Australian Competition Tribunal, which could take a year. By then, Virgin Blue might be flying on the Tasman routes, Mr Huttner said.

"It is quite possible that between now and the time the tribunal takes place, Virgin Blue may have some very limited services to New Zealand. But that will not create the force for competition that is required to ensure the Air New Zealand-Qantas deal does not undermine consumer interests."
============================================

[Wirraway]

AAP

Air NZ silent on alliance alternatives

Air New Zealand remains so firmly committed to its proposed alliance with Qantas it is not prepared to discuss possible alternatives to the contentious plan.

Air NZ chief executive Ralph Norris told NZPA the two airlines remained "very confident that the alliance will be approved in due course".

Mr Norris said in deciding to pursue the Qantas deal Air NZ had "reviewed a number of options and this particular option is head and shoulders above any other".

Mr Norris would not indicate what Air NZ's next move would be should competition watchdogs here and in Australia give the proposal the thumbs down.

"All of this sort of information could have an impact on the value of shares in the company and would require stock exchange releases etcetera so I'm not going to discuss those matters," he said.

The proposed alliance would see Qantas buy a 22.5 per cent stake in Air NZ, with all their flights to, from, and within New Zealand run by a central committee.

The plan was initially rejected as anti-competitive by regulators in Australia and New Zealand but the two airlines yesterday promised to make room for competitors on trans-Tasman and New Zealand routes if the Australian competition watchdog approved the deal.

But some analysts questioned the value of the concessions and said they were not as generous as they initially appear.

National Party transport spokesman Roger Sowry said New Zealand travellers could "take no comfort from the reshaping of the deal".

"The National Party has said right from the outset that this proposal was anti-competitive, our initial assessment has been proved correct," Mr Sowry said in a statement.

"Despite claims to the contrary, the consortium is giving up very little."

Airline Virgin Blue which has indicated an interest in entering the trans-Tasman and New Zealand domestic markets and has much to gain from the deal failing was even more scathing.

Virgin Blue commercial head David Huttner said the complex set of proposals were like "lipstick on a pig" -- a cosmetic attempt to hide the deal's bad points.

Virgin Blue would like to see Air NZ sell its budget Freedom Air subsidiary giving it room to establish itself in the market.

The sale of Freedom Air would be enough to answer all of Virgin Blue's objections, he said.

But Air NZ accused Virgin Blue of being "the big bad wolf dressed up as Little Red Riding Hood's grandmother" intent on "knocking Freedom Air out of the skies".

"Basically they're endeavouring to get the best possible concessions they can get and they're not satisfied with what we would regard as reasonable," Mr Norris said.

"Our latest undertakings give Virgin Blue a clear run at setting up trans-Tasman an domestic New Zealand services without any competition in the Value Based Airline segment on some routes, but still that is not enough. They are demanding a permanent monopoly.

©AAP 2003

[HGW]

QFPAYPACKET:

If you are embarrassed, leave.
The pay is almost the same as QF. The VB rates for ground staff are TWU negotiated and sanctioned.

No internal marketing needed, just a caring company with limitless possibilities as opposed to other airlines.

All people have choices and it seems that a hell of a lot of VB staff choose to stay and are happy. It is not all about what wages are paid with regard to how much profits are made. It is about being efficient. VB is at almost the same level of daily pax numbers as Ansett with a fraction of the staff. They are doing something right.

[Buster Hyman]

Air New Zealand remains so firmly committed to its proposed alliance with Qantas it is not prepared to discuss possible alternatives to the contentious plan.

They must have the 2 clowns from Ansett's administrators negotiating for them!!!:eek:

Gawd bless ya HGW!
The VB rates for ground staff are TWU negotiated and sanctioned.
In other words, this is what we are prepared to pay our staff, you either sanction it, or everybody goes on contract & you don't get any members!!:suspect: