Air NZ + Qantas deal
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Air NZ + Qantas deal
Regulator Turns Down Air NZ-Qantas Deal
03/11/2006
NZPA
Qantas said on Friday that regulators had proposed to turn down a proposal to code share with Air New Zealand on trans-Tasman routes.
The Australian Competition and Consumer Commission (ACCC) said the plan would result only in limited public benefits, in the form of cost savings for the airlines.
It would also mean marginal improvements in "schedule spread, connectivity and frequent flyer options for consumers".
"Authorisation of the agreement would fundamentally change the competitive process on the trans-Tasman," ACCC chairman Graeme Samuel said.
The deal must also be approved by New Zealand Transport Minister Annette King. It was believed she was waiting for the ACCC draft ruling.
Air NZ said it would make comment shortly.
Qantas and Air NZ are the largest competitors on the trans-Tasman routes, accounting for around 80 percent of passengers between Australia and New Zealand.
Both operate wholly-owned "low cost carriers" - Jetstar and Freedom Air - in the market.
The ACCC said Qantas and Air NZ would continue to be constrained to some extent on the trans-Tasman by Virgin Blue and Emirates. But because these rivals faced impediments to further expansion on the route, they could not replace the competitive dynamic which would be lost through the code-sharing agreement.
"In these circumstances, the limited benefits from the agreement will not outweigh what the ACCC considers will be significant detriment to consumers in the form of higher prices and reduced travel options at key times."
Submissions to the ACCC's draft decision are being sought.
RESPONSE
Air New Zealand today said it was flabbergasted and astounded by the ACCC’s draft determination to turn down an application for a codeshare with Qantas on the Tasman.
Chief Financial Officer Rob McDonald says a preliminary review of the determination indicates several inconsistencies.
“Although we have only had a short amount of time to review the determination’s contents, we have already spotted flaws and we will be raising these with the ACCC before a final determination is made,” says Mr McDonald.
The proposed codeshare with Qantas is designed to remove excess capacity on the Tasman, while increasing frequency and maintaining everyday low fares.
“If the ACCC sticks with this determination – and let’s remember it has been proven to change its mind - it is potentially forcing Air New Zealand to make capacity and route decisions that will come at a significant cost to consumers. We cannot continue to fly the equivalent of 43 empty A320 aircraft across the Tasman daily. That’s 6300 empty seats every day.
03/11/2006
NZPA
Qantas said on Friday that regulators had proposed to turn down a proposal to code share with Air New Zealand on trans-Tasman routes.
The Australian Competition and Consumer Commission (ACCC) said the plan would result only in limited public benefits, in the form of cost savings for the airlines.
It would also mean marginal improvements in "schedule spread, connectivity and frequent flyer options for consumers".
"Authorisation of the agreement would fundamentally change the competitive process on the trans-Tasman," ACCC chairman Graeme Samuel said.
The deal must also be approved by New Zealand Transport Minister Annette King. It was believed she was waiting for the ACCC draft ruling.
Air NZ said it would make comment shortly.
Qantas and Air NZ are the largest competitors on the trans-Tasman routes, accounting for around 80 percent of passengers between Australia and New Zealand.
Both operate wholly-owned "low cost carriers" - Jetstar and Freedom Air - in the market.
The ACCC said Qantas and Air NZ would continue to be constrained to some extent on the trans-Tasman by Virgin Blue and Emirates. But because these rivals faced impediments to further expansion on the route, they could not replace the competitive dynamic which would be lost through the code-sharing agreement.
"In these circumstances, the limited benefits from the agreement will not outweigh what the ACCC considers will be significant detriment to consumers in the form of higher prices and reduced travel options at key times."
Submissions to the ACCC's draft decision are being sought.
RESPONSE
Air New Zealand today said it was flabbergasted and astounded by the ACCC’s draft determination to turn down an application for a codeshare with Qantas on the Tasman.
Chief Financial Officer Rob McDonald says a preliminary review of the determination indicates several inconsistencies.
“Although we have only had a short amount of time to review the determination’s contents, we have already spotted flaws and we will be raising these with the ACCC before a final determination is made,” says Mr McDonald.
The proposed codeshare with Qantas is designed to remove excess capacity on the Tasman, while increasing frequency and maintaining everyday low fares.
“If the ACCC sticks with this determination – and let’s remember it has been proven to change its mind - it is potentially forcing Air New Zealand to make capacity and route decisions that will come at a significant cost to consumers. We cannot continue to fly the equivalent of 43 empty A320 aircraft across the Tasman daily. That’s 6300 empty seats every day.
Last edited by slamer.; 3rd Nov 2006 at 08:18. Reason: add response
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I work in an area where you see actual pax numbers on flights to and from most ports in NZ. If there are 6300 seats unfilled each day over the Tasman I would be surprised. Most QF flights would be about 70% or more load factor and the NZ ones I have been on have also been about the same. QF at the moment does have capacity it cannot sell about 10 seats on the domestic configed (30/222) B767-300's as they don't have the lift raft capacity. This is a problem of QF's doing not the ACCC.
I would say with a certain amount of confidence that this figure was plucked out of thin air, and maybe meant to frighten or bully the ACCC in giving a favourable ruling.
I would say with a certain amount of confidence that this figure was plucked out of thin air, and maybe meant to frighten or bully the ACCC in giving a favourable ruling.
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We cannot continue to fly the equivalent of 43 empty A320 aircraft across the Tasman daily. That’s 6300 empty seats every day.
I fly to NZ about once a month (as a pax).
The empty seats are seldom on my flights????.
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Whenever I operate across the pond the biggest problem we have is to get the work done in such a short flight time.The flights are usually full with maybe the early departures out of AKL with a few seats spare.
I can’t imagine the total daily capacity across the pond being the equivalent of 43 A-320’s .Even if you included the QF 767’s used as freighters the figure sounds imaginary.
In fact if the statement was that there were 630 spare seats per day I would doubt it let alone 6300.
I agree with rammel's conclusion
I can’t imagine the total daily capacity across the pond being the equivalent of 43 A-320’s .Even if you included the QF 767’s used as freighters the figure sounds imaginary.
In fact if the statement was that there were 630 spare seats per day I would doubt it let alone 6300.
I agree with rammel's conclusion
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I think rammel was right and that it is purely a political statement to get sympathy to achieve an alliance and drop frequency.
Even the equivalent of 43 empty aircraft or 6300 seats a week is a bit rich.If the load factor was that poor Darth would be reducing the frequency whether or not there was an alliance with ANZ
Even the equivalent of 43 empty aircraft or 6300 seats a week is a bit rich.If the load factor was that poor Darth would be reducing the frequency whether or not there was an alliance with ANZ
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Is it possible that this "43 empty A320's" comparison is the combination of all the empty seats on all airlines that cross the tasman?
Either way though I too think it sounds a bit over-dramatized
Either way though I too think it sounds a bit over-dramatized
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Business
Trans-Tasman code share not vital, claims Air NZ
1.00pm Thursday November 9, 2006
A proposed trans-Tasman code share agreement rejected by Australia's competition watchdog is not critical to Air New Zealand's future, says chief executive Rob Fyfe. The code share with Qantas was just one of eight large projects the airline had on the go, he said. Air NZ and Qantas have to decide by the end of next week whether to call for a hearing before the Australian Competition and Consumer Commission, go direct to appeal on the draft decision, or walk away, The Dominion Post reported today.
The commission rejected the proposal last week on the grounds it would benefit only the airlines and not passengers.
Mr Fyfe said the code share would help ensure all routes were self supporting, with no cross-subsidisation within the business.
"But in the whole scheme of what is going on in the airline at the moment, it is one of about eight key initiatives that in order of magnitude have equivalent value to this proposal on the Tasman," he said.
Among the initiatives were talks with airport workers on ways to save $20 million a year, assessing new long-haul routes, and replacing its fleet.
- NZPA
Trans-Tasman code share not vital, claims Air NZ
1.00pm Thursday November 9, 2006
A proposed trans-Tasman code share agreement rejected by Australia's competition watchdog is not critical to Air New Zealand's future, says chief executive Rob Fyfe. The code share with Qantas was just one of eight large projects the airline had on the go, he said. Air NZ and Qantas have to decide by the end of next week whether to call for a hearing before the Australian Competition and Consumer Commission, go direct to appeal on the draft decision, or walk away, The Dominion Post reported today.
The commission rejected the proposal last week on the grounds it would benefit only the airlines and not passengers.
Mr Fyfe said the code share would help ensure all routes were self supporting, with no cross-subsidisation within the business.
"But in the whole scheme of what is going on in the airline at the moment, it is one of about eight key initiatives that in order of magnitude have equivalent value to this proposal on the Tasman," he said.
Among the initiatives were talks with airport workers on ways to save $20 million a year, assessing new long-haul routes, and replacing its fleet.
- NZPA
