Air NZ calls for ACCC to be consistent

Media Release 21 November 2008

Air New Zealand calls for ACCC to be consistent

Air New Zealand is calling on the Australian Competition and Consumer Commission to demonstrate consistency when making a final ruling on its application for a Cooperation Agreement with Air Canada.

The Cooperation Agreement would involve the two airlines jointly promoting and selling direct flights between Sydney and Vancouver (operated by Air Canada) and Auckland and Vancouver (operated by Air New Zealand).

The Cooperation Agreement also provides for the airlines to pool and share revenue in relation to the direct flights.

Group General Manager International Airline Ed Sims says Air New Zealand is extremely surprised the ACCC has formed a preliminary view that the Cooperation Agreement is likely to substantially reduce competition for flights between Australia and Canada.

"As the ACCC noted, there are already four main carriers on the route. As evidenced around the world, wherever there are two or more carriers, competition is intense and consumers benefit through low fares and a choice of frequency not to mention a variety of product offerings. Therefore, we are struggling to understand how the ACCC has formed its preliminary view and will be making further submissions ahead of the final determination," Mr Sims says.

"A cornerstone of those submissions will be a call for consistency. Qantas has a relationship with South African Airways on the highly uncompetitive Johannesburg route and a codeshare with Japan Airlines, which is its only competitor for direct services to Japan. On top of that it also has an ACCC-backed long established agreement with British Airways."

Mr Sims says Air New Zealand is also concerned by the ACCC's view that the Cooperation Agreement is not needed to underpin the direct services, or to ensure the ongoing provision of direct services.

"The ACCC would seem to be ignoring the reality of the global economic meltdown and the fact that this year more than two dozen airlines around the globe have collapsed while those remaining take the knife to their businesses, including axing non-profitable and marginal services."

ENDS

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