Air NZ, Singapore alliance closer

Asian airline's authorities approve deal, saying competition concerns would be offset by economic benefits.

Air New Zealand said it welcomed the Singaporean decision. Photo / APN
Air New Zealand said it welcomed the Singaporean decision. Photo / APN

The planned strategic alliance between Air New Zealand and Singapore Airlines has taken an important step with Singaporean authorities giving it approval in spite of competition concerns.

New Zealand Ministry of Transport officials are still working on assessing the deal that the airlines hope will be approved later this year.

Under the plan Air New Zealand will restart services to Singapore, and the two airlines would co-ordinate their operations between the two countries and on certain services beyond.

The alliance would provide another route for flights between New Zealand and Europe.

Capacity would rise with extra flights and bigger Airbus A380 aircraft being used on the route by Singa-pore Airlines. The airlines say total capacity would increase by 30 per cent on a route where there has been little growth over the past five years.

Transport Minister Gerry Brownlee will give the final decision and a spokesman said he had not seen anything from officials yet.

While there has been broad support for the plan from the travel and tourism industry, Auckland Airport in its submission to the ministry urged the Government to consider closely the threat posed to competition.

The only other airline flying directly between Auckland and Singapore, Jetstar, announced last month it was pulling out of the route and it was redeploying aircraft to more profitable routes.

In its decision the Competition Commission of Singapore said the alliance could raise competition concerns but these would be offset by net economic benefits to that country.

In the course of its assessment, the Competition Commission considered feedback from various groups including the Civil Aviation Authority of Singapore, Changi Airport and government agency Vital Shared Services.

Air New Zealand said it welcomed the Singaporean decision.

Tourism New Zealand said in an additional submission to New Zealand's ministry that while it understood that capacity expansion is also planned by Singapore Airlines into the South Island, it said consideration should be given to a minimum capacity threshold. The tourist organisation said that with Garuda confirming that it would not proceed with a direct Indonesia-Auckland service and Jetstar withdrawing from Auckland-Singapore from July 2014 there was a risk the route would be "significantly underserved" if the alliance was not approved.

Air NZ withdrew from the route in 2006 after it sustained losses due to the substantial disadvantage it faced in attracting feeder traffic into the route.

In their submission to the ministry the airlines said there would be more seats available in the lower-fare classes.

"All other things being equal, a carrier with a higher number of seats available will need to protect a lower percentage of seats and hence release a relatively greater number of lower priced fares."

The plan
*Air New Zealand and Singapore Airlines will have access to the Singaporean carrier's Southeast Asia network - including aboard subsidiary SilkAir - and beyond to India, Africa, Britain and Europe.
*The two airlines will also share revenue between New Zealand and Singapore.
*Singapore Airlines plans to use an Airbus A380 to Auckland and another 100,000 seats will be added a year between the two countries.

- NZ Herald

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