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Qantas and Air New Zealand disappointed with Commerce Commission decision

Search ASIA Travel Tips .com 23 October 2003

Air New Zealand today announced that it would be closely examining the New Zealand Commerce Commission's decision before deciding whether to file an appeal with the High Court.

Air New Zealand's Chief Executive and Managing Director, Ralph Norris, said that Air New Zealand will closely review the Commerce Commission's decision to determine the most appropriate course of action for Air New Zealand. The Company will then have discussions with Qantas before confirming its course of action.

"The NZCC determination requires careful consideration before we are in a position to make an informed decision on whether to proceed with appeals in both jurisdictions," Mr Norris said.

Mr Norris said he was extremely disappointed that the level of information Air New Zealand had provided the NZCC and the weight of fact and evidence from internationally renowned economists and aviation industry experts had counted for little.

"It is particularly disappointing that competition regulators continue to stare into the rear vision mirror and ignore the significant structural challenges facing airlines all around the world. The alliance offered the opportunity to look into the future and provide a platform for sustainable growth as we compete against all-comers in an uneven international environment."

A consequence of today's decision by the NZCC is that the conditional agreement between Virgin Blue and Air New Zealand for terminal access and ground handling facilities is now null and void, as the agreement was conditional upon the NZCC approving the alliance.

Mr Norris said that despite the NZCC's decision and regardless of any appeal, Air New Zealand would have no option but to continue to work very hard to retain its position as the leading airline in the South Pacific, but the job of remaining competitive has just become much harder.

Mr Norris said that a key to the airline remaining competitive in the short-term was driving cost out of the business and focusing on growth.

On the same subject Qantas today said it would hold discussions with Air New Zealand before deciding on a future direction for the two airlines' proposed alliance.

The Chief Executive Officer of Qantas, Geoff Dixon, said the talks would take place over the next few weeks and would canvass all options.

"We still believe an alliance between Qantas and Air New Zealand is in the best interests of aviation in this region and would deliver significant benefits to travellers and tourism," Mr Dixon said.

He said the New Zealand Commerce Commission, like the Australian Competition and Consumer Commission, had taken a very narrow view of competition and consumer interests and either ignored or underestimated the significant structural challenges facing the aviation industry.

"The decisions of the NZCC and the ACCC are at odds with what is occurring around the world," Mr Dixon said.

"In Europe, Air France and KLM have just signed a merger agreement that will see them operate a total of 540 aircraft and employ 106,000 people. Other European airlines are holding discussions, while British Airways has indicated it may revive its plans for greater co-operation with American Airlines.

"More broadly, the European Union and the United States have commenced talks about dropping barriers between their markets to form a Transatlantic Common Aviation Area. Once this occurs, airlines will be encouraged to invest in each other across national boundaries.

"In the United States, Delta, Northwest and Continental have been given approval to form a three-way alliance while US Airways and United Airlines have recently expanded their codeshare alliance to cover 1600 flight segments.

"There are simply too many airlines in the world today and it is inevitable that there will be further pressures toward consolidation and some very large and powerful groups could emerge." Mr. Dixon concluded.

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