Air NZ 'chasing' Qantas alliance
 

April 13, 2003

AIR New Zealand is going back to the drawing board after its planned alliance with Australia's Qantas Airways Ltd was rejected by the competition watchdogs of the two countries.

Air NZ chief executive Ralph Norris said the airline is not prepared to give up after analysing the draft determinations of the Australian Competition and Consumer Commission and New Zealand's Commerce Commission.

"There are a number of misunderstandings or clarifications that need to be made because certainly the assumptions that we have used have been pretty much dismissed and I think the validity of the arguments have not been well understood," he said.

ACCC chairman Professor Allan Fels said last week the effect of the $500 million alliance would be to remove competition on the trans-Tasman route and be likely to raise prices and reduce service.

Mr Norris told Channel Nine's Business Sunday that he will up the ante to make sure that the benefits flowing from Qantas taking a 22.5 per cent stake in the New Zealand airline is fully understood.

He said Air NZ looked at a number of options about its future and the alliance with Qantas was head and shoulders above the others.

Mr Norris conceded that Air NZ could pull out of international travel if the Qantas alliance continues to be barred.

"We will review our position once we obviously have finality as to whether or not this alliance is going to be approved or not," he said.

He said while there is a further $150 million on the table from the NZ government, the airline could return to shareholders for more capital.

"That will have to be based on a realistic business plan and a view that the company is capable of giving a reasonable return to its investors on that capital," he said.

He also ruled out turning to Air NZ stakeholder Singapore Airlines for capital.

"Singapore has its own issues and own interests and I would be very surprised if Singapore was a source of capital for the airline," Mr Norris said.

On the same program Prof Fels said if Air NZ and Qantas appealed it was the duty of the regulator to look at the arguments carefully.

But he said the harm an alliance would do to competition on the trans Tasman route is very substantial with not much benefit.

"We can see right through what Qantas and Air New Zealand are trying to do," he said.

"It is to reduce competition on the Australia-New Zealand route which will put up prices, which will make it a one airline route, not a two airline route."

And he said he would want to hear all the facts surrounding and threat by Air NZ to withdraw from internal flights.

"You can't just go on a TV program and say well, maybe we'll run that arguments and see what happens," he said.

"It does sound a pretty interesting proposition from an airline with a major share of the market to say they'll withdraw because they fear some competition."

AAP

Dear Mr Roota,
Seems you should read the comments made by the chief of ANZ re the chances of its survival without QF. Seems Kiwi pride alone will not be enough for its survival as we all really know but some are not willing to accept. Sadly it is reaching the stage where Australia and NZ are simply not a big enough market to keep 2 high cost airlines operating. If it does not happen soon we will still most likely end up with only 1 airline anyhow and you can bet your last kiwi dollar it will not be ANZ.

Kangaroota:

Looking at the equation from a QF side.

Without a merger/alliance, QF face a war of attrition against what is really a state owned airline with the state being socialist in nature.

They have already shown a willingness to throw NZ taxpayers money into the bottomless pit that is the airline business.

A non-aligned Air NZ will not be allowed to wither and die.

It will continue to be proped up by the NZ government at the expense of the NZ taxpayer.

Sure, Air NZ is showing some signs of life. But the patient is not yet out of intensive care. New Equipment has to be paid for some how.

An aligned Air NZ is the better option for QF & for the NZ government. Quite possibly, the pollies in 'Helensgrad' have secretly sweetened the deal as well.

The Pacific airline passener will be the big loser.

Even if Freedom Air becomes the sacrificial lamb (after all - who would buy it??) and DJ plies the Tasman with a discount service. I can see ticket prices to the USA skyrocketing (remember, no more United to NZ).

Ha! Suffer in ya jocks ya farrgen kaahhhnns
 

Really, given that a AN/NZ/SQ vs. QF would have given both the Oz and NZ public a reasonable and sustainable level of competition, the current situation is a joke. Helen must be able to see quite plainly that AirNZ must get foreign capital. By refusing SQ investment in AirNZ/Ansett 15 months ago she only postponed the inevitable. So as not to be seen to be selling off NZ national assets, she sunk 16,000 Oz jobs including mine. The Oz govt. must also wear its share of blame as our govt. hoped that the death of AN would lead to downward pressure on airline wages and conditions. Not to mention the lobbying that went on to make sure that ANs demise would give more bonuses to QF managers. So now where are we? Helen is once again stuck with a airline in need of money, QF and AirNZ managers bleating for a solution that gives them more bonuses and the traveling public once again worse off. In short, airline policy in both Oz and NZ is a failure.