EMMA KELLY / PERTH
Air New Zealand (ANZ) and Qantas are preparing for separate lives after the New Zealand Commerce Commission (NZCC) followed the lead of its Australian counterpart and rejected the airlines' planned alliance. The rejection was a major blow to the partners, which had been hoping for a favourable response from the New Zealand authority following a more extensive consideration than by the Australian Competition and Consumer Commission (ACCC).
Qantas chief executive Geoff Dixon says the airlines need to discuss their options before appealing against the decision, which would have to be heard by the New Zealand high court. The partners have already appealed to the Australian Competition Tribunal against the ACCC decision, which will not be heard until next year. Analysts suggest that appeals in both countries are unlikely, as they would be costly and prolonged.
The governments of Australia and New Zealand supported the alliance and some analysts expect the administrations will have to act to allow an alliance to proceed to ensure the viability of the carriers, particularly Air New Zealand.
The NZCC concluded that the proposed alliance would damage competition and harm consumers, resulting in an average 19% increase in air fares, reduced quality of service and fewer flights. The arrival of Virgin Blue and other carriers on trans-Tasman routes is not enough to allay its concerns, says the commission. "The detriments are likely to be NZ$195 million and the benefits $40.5 million in year three, largely due to cost savings," it says.
Source: Flight International
