Qantas clear for alliances
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Qantas clear for alliances
Wed "The Australian"
Qantas clear for alliances
Steve Creedy, Aviation writer
October 13, 2004
QANTAS has been given a green light to more aggressively pursue regional alliances after the Australian Competition Tribunal yesterday approved its proposed tie-up with Air New Zealand.
Although the ACT's decision comes too late to save the $NZ550 million ($515 million) equity deal, industry observers believe it opens the way for wider co-operation across the Tasman and suggests Qantas would have little trouble gaining approval for a deal with carriers operating on more-competitive Asian routes.
Air NZ chief executive Ralph Norris also canvassed the possibility of an attempt to resurrect the alliance in the future. "I don't think there's any doubt about that," he told The Australian. "I think this decision on the Australian side does give us the opportunity to look at a re-application in two or three years to the New Zealand Commerce Commission."
The carriers abandoned their deal after New Zealand's High Court backed an NZCC ruling that the proposal was anti-competitive and not in the public benefit. They said yesterday they would not appeal the High Court decision because of the time, expense and small likelihood of success, effectively hammering the last nail in the current deal's coffin.
But both took solace in yesterday's tribunal decision overturning a similar finding by the Australian Competition & Consumer Commission.
The tribunal said the Air NZ deal - which would have allowed the airlines to co-ordinate pricing, scheduling, marketing and customer service - would probably have resulted in a public benefit that would outweigh the reduction in competition.
While welcoming the decision, Qantas CEO Geoff Dixon said the three-year proceedings represented a lost opportunity for much-needed aviation reform and raised questions about the future of aviation in region.
But he said Qantas would examine the full decision "as it may provide useful guidance for possible future partnership and consolidation opportunities that may arise in our region".
Qantas chief financial officer Peter Gregg agreed with assessments by Philips Fox competition law partner Simon Uthmeyer, who said that the decision would improve the ability of Qantas to enter into an alliance with Asian carriers.
"I think it actually indicates that Australian authorities can see that the things we've been saying about the industry needing to consolidate and the qualities that exist ... like government-sponsored airlines," Mr Gregg said.
Qantas has been expanding its Asian interests in the past year. It is planning to launch a low-cost carrier based in Singapore, JetStar Asia, in partnership with the Singapore Government-owned Temasek and local business people.
It has also sealed a freight joint venture, Thai Air Cargo, with observers expecting the company to seek further alliances in the region. There have been reports of a possible tie-up with Singapore Airlines, but analysts say this is unlikely.
Mr Gregg was more cautious on talks with Air NZ about ways the carriers could work together without contravening NZ competition law, saying the airline was still looking at whether the partnerships were justified.
But Mr Norris argued the positive decision could free up the airlines to form wider partnerships.
Smith Barney Citigroup transport analyst Jason Smith said the decision could allow the airlines to rationalise some capacity on the Tasman, improve scheduling and remove duplicated costs.
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Qantas clear for alliances
Steve Creedy, Aviation writer
October 13, 2004
QANTAS has been given a green light to more aggressively pursue regional alliances after the Australian Competition Tribunal yesterday approved its proposed tie-up with Air New Zealand.
Although the ACT's decision comes too late to save the $NZ550 million ($515 million) equity deal, industry observers believe it opens the way for wider co-operation across the Tasman and suggests Qantas would have little trouble gaining approval for a deal with carriers operating on more-competitive Asian routes.
Air NZ chief executive Ralph Norris also canvassed the possibility of an attempt to resurrect the alliance in the future. "I don't think there's any doubt about that," he told The Australian. "I think this decision on the Australian side does give us the opportunity to look at a re-application in two or three years to the New Zealand Commerce Commission."
The carriers abandoned their deal after New Zealand's High Court backed an NZCC ruling that the proposal was anti-competitive and not in the public benefit. They said yesterday they would not appeal the High Court decision because of the time, expense and small likelihood of success, effectively hammering the last nail in the current deal's coffin.
But both took solace in yesterday's tribunal decision overturning a similar finding by the Australian Competition & Consumer Commission.
The tribunal said the Air NZ deal - which would have allowed the airlines to co-ordinate pricing, scheduling, marketing and customer service - would probably have resulted in a public benefit that would outweigh the reduction in competition.
While welcoming the decision, Qantas CEO Geoff Dixon said the three-year proceedings represented a lost opportunity for much-needed aviation reform and raised questions about the future of aviation in region.
But he said Qantas would examine the full decision "as it may provide useful guidance for possible future partnership and consolidation opportunities that may arise in our region".
Qantas chief financial officer Peter Gregg agreed with assessments by Philips Fox competition law partner Simon Uthmeyer, who said that the decision would improve the ability of Qantas to enter into an alliance with Asian carriers.
"I think it actually indicates that Australian authorities can see that the things we've been saying about the industry needing to consolidate and the qualities that exist ... like government-sponsored airlines," Mr Gregg said.
Qantas has been expanding its Asian interests in the past year. It is planning to launch a low-cost carrier based in Singapore, JetStar Asia, in partnership with the Singapore Government-owned Temasek and local business people.
It has also sealed a freight joint venture, Thai Air Cargo, with observers expecting the company to seek further alliances in the region. There have been reports of a possible tie-up with Singapore Airlines, but analysts say this is unlikely.
Mr Gregg was more cautious on talks with Air NZ about ways the carriers could work together without contravening NZ competition law, saying the airline was still looking at whether the partnerships were justified.
But Mr Norris argued the positive decision could free up the airlines to form wider partnerships.
Smith Barney Citigroup transport analyst Jason Smith said the decision could allow the airlines to rationalise some capacity on the Tasman, improve scheduling and remove duplicated costs.
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