Tasman fear at Air France-KLM tie
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Tasman fear at Air France-KLM tie
Fri "The Australian"
Tasman fear at Air France-KLM tie
By Steve Creedy and AFP
February 13, 2004
ARGUMENTS by Air New Zealand and Qantas that airline consolidation could see them steamrollered by giant global carriers gained ground yesterday with the approval of a merger between Air France and Dutch airline KLM.
Regulators on both sides of the Atlantic approved the merger, opening the way for the world's biggest airline in terms of revenue and the third biggest after American Airlines and United Airlines in terms of passengers flown.
The deal, expected to be completed by the middle of this year, is likely to provide welcome ammunition for appeals under way in Australia and New Zealand.
Qantas and Air NZ are challenging a decision by regulators on both sides of the Tasman to reject as anti-competitive a deal which would have seen the Australian carrier take a 22.5 per cent stake worth $NZ550 million ($490 million) in its Kiwi counterpart.
The airlines had argued that the alliance would leave them better placed to weather a wave of consolidation expected as the global aviation industry liberalises.
Both carriers said yesterday that the decision underscored the changing nature of the industry.
"As we've said many times, consolidation of the airline industry is inevitable and necessary," said Qantas chief executive Geoff Dixon.
"That position will need to be realised at some time in the future in this part of the world."
Air NZ said the merger was "reflective of the need for change in the aviation industry".
The Air France/KLM tie-up was described by analysts as a milestone in the consolidation of European civil aviation.
Deutsche Bank said the case was "a true test of European airlines' capacity to regroup".
But approval was not unconditional.
The European Union executive said the two airlines must surrender 94 take-off and landing slots per day to rival carriers to ensure price competition to produce lower fares for travellers.
"The outcome of this case shows that the long-awaited consolidation of the European airline sector can be done in full respect of competition rules," said EU competition commissioner Mario Monti. "The merger between KLM and Air France will provide air passengers with a greater choice of destinations and services without having to pay a higher price on those routes where their presence is the strongest."
Other key conditions of the EU ruling included a requirement that the Dutch and French governments guarantee that they would grant flying rights to rival airlines wishing to stop over in Amsterdam or Paris en route to the US or other non-EU destinations.
The commission also demanded an assurance from the airlines that they would not regulate prices on long-haul routes where other carriers offered non-direct services competing with Air France and KLM.
The combined turnover of the two airlines was some E19.17 billion in 2002-03, compared with $US17.3 billion for American Airlines.
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Tasman fear at Air France-KLM tie
By Steve Creedy and AFP
February 13, 2004
ARGUMENTS by Air New Zealand and Qantas that airline consolidation could see them steamrollered by giant global carriers gained ground yesterday with the approval of a merger between Air France and Dutch airline KLM.
Regulators on both sides of the Atlantic approved the merger, opening the way for the world's biggest airline in terms of revenue and the third biggest after American Airlines and United Airlines in terms of passengers flown.
The deal, expected to be completed by the middle of this year, is likely to provide welcome ammunition for appeals under way in Australia and New Zealand.
Qantas and Air NZ are challenging a decision by regulators on both sides of the Tasman to reject as anti-competitive a deal which would have seen the Australian carrier take a 22.5 per cent stake worth $NZ550 million ($490 million) in its Kiwi counterpart.
The airlines had argued that the alliance would leave them better placed to weather a wave of consolidation expected as the global aviation industry liberalises.
Both carriers said yesterday that the decision underscored the changing nature of the industry.
"As we've said many times, consolidation of the airline industry is inevitable and necessary," said Qantas chief executive Geoff Dixon.
"That position will need to be realised at some time in the future in this part of the world."
Air NZ said the merger was "reflective of the need for change in the aviation industry".
The Air France/KLM tie-up was described by analysts as a milestone in the consolidation of European civil aviation.
Deutsche Bank said the case was "a true test of European airlines' capacity to regroup".
But approval was not unconditional.
The European Union executive said the two airlines must surrender 94 take-off and landing slots per day to rival carriers to ensure price competition to produce lower fares for travellers.
"The outcome of this case shows that the long-awaited consolidation of the European airline sector can be done in full respect of competition rules," said EU competition commissioner Mario Monti. "The merger between KLM and Air France will provide air passengers with a greater choice of destinations and services without having to pay a higher price on those routes where their presence is the strongest."
Other key conditions of the EU ruling included a requirement that the Dutch and French governments guarantee that they would grant flying rights to rival airlines wishing to stop over in Amsterdam or Paris en route to the US or other non-EU destinations.
The commission also demanded an assurance from the airlines that they would not regulate prices on long-haul routes where other carriers offered non-direct services competing with Air France and KLM.
The combined turnover of the two airlines was some E19.17 billion in 2002-03, compared with $US17.3 billion for American Airlines.
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