Qantas deal 'a must'- the Minister for Qantas
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Air NZ, Qantas renew bid
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
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
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Virgin Blue rejects new deal
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."
============================================
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."
============================================
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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
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
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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.
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.
Evertonian
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.
Gawd bless ya HGW!
The VB rates for ground staff are TWU negotiated and sanctioned.
