Australia's antitrust agency has approved the alliance between Ansett, Air New Zealand, and Singapore Airlines, paving the way for the three carriers to turn up the heat on the Qantas-British Airways strategic alliance.
The Australian Competition and Consumer Commission (ACCC) tentatively approved the tripartite agreement despite its concern that Ansett, Air New Zealand, and Singapore Airlines have agreed to fix prices by offering joint fares and that Ansett entered an exclusionary arrangement by agreeing not to align itself with any other airline in southeast Asia, India, or the Middle East. ACCC chairman Alan Fels had publicly expressed concern that these provisions violated Australia's trade practices act, but the commission decided the alliance had potential public benefits outweighing these concerns.
Allan Asher, ACCC acting chairman explains: 'The ACCC found that while the alliance would increase market concentration levels marginally it will enhance the alliance's ability to compete, particularly with the Qantas/British Airways group.'
The ACCC examined a number of market factors to assess the alliance's likely competitive impact, including changed market concentration, the ability to substitute indirect for direct services, and price leadership.
The commission's draft decision, which is expected to become final without major changes, effectively grants antitrust immunity to the Ansett, Air New Zealand, and Singapore Air alliance for five years.
'From the standpoint of Ansett and increasingly Air New Zealand, this was a marriage they desperately needed,' says Peter Harbison, managing director of Sydney's Centre for Asia Pacific Aviation.
Antitrust approval sets the stage for the three alliance partners to seek codeshare authority. The ACCC and Australia's International Air Services Commission confer on such issues, but the IASC has the final say on specific routes. Even though Ansett has the green light to codeshare with its alliance partners from an antitrust standpoint, it still requires IASC approval.
Harbison sees it as unlikely that Ansett will start codesharing on the Kangaroo Route between Australia and the UK. Ansett lacks the underlying authority to operate that route and both countries currently require such authority as a prerequisite to codesharing. The more likely scenario is that Ansett will codeshare only to Singapore, and SIA and Air New Zealand codes will be on flights to Europe.
James Strong, managing director of Qantas, expects the alliance to help Ansett on domestic routes. 'It will give them a locked in arrangement with Singapore Airlines, which is a formidable operation.'
Source: Airline Business
