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Lower fares 'unlikely' if Air NZ plan approved

By Beck Vass

A partnership between Air New Zealand and Australian airline Virgin Blue that could result in up to 80 more flights across the Tasman each week is unlikely to deliver cheaper fares, aviation experts say.

The airlines yesterday revealed plans for a code-sharing alliance that, if accepted by New Zealand's Ministry of Transport and the Australian Competition and Consumer Commission, will see passengers share aircraft between the two countries and on domestic connecting flights.

Air NZ chief Rob Fyfe said last night the airline's 130 flights a week across the Tasman would increase to 210, which would be more evenly distributed throughout the week.

Virgin Blue would operate 70 of the flights but passengers would travel on Air NZ tickets.

Meals, baggage allowances, fare classes and aircraft would be "aligned" for passengers, who would be able to use each airline's airpoints and airport lounges.

"[Virgin Blue] haven't announced the detail yet but they've announced they're going to roll out an Airline of the Future product and we know that that is going to be very, very similar to what our product offering is," said Mr Fyfe.

"Our belief, and what our alliance agreement requires, is that Virgin's product offering and our product offering are aligned.

"If you don't have product alignment it's really hard to make these sorts of alliances work."

Mr Fyfe said the average price of the cheapest fares to Australia would probably stay about the same but it was possible more expensive flights would be at least 10 per cent cheaper.

He said the airline had struggled to make money from the Tasman market and he hoped the move would see an increase in passengers from competitor airlines.

"You either keep reducing [services] until you cease to exist or you find another way to strengthen your position, and the best way to do that is to find a partner to work with.

"Our view is if we don't do this then we'll end up becoming a smaller and smaller player on the Tasman and we won't have any other choices."

Experts contacted yesterday agreed. Brent Thomas, retail director for House of Travel said the alliance appeared to be a great move which would make the highly-competitive Tasman route more sustainable.

It would open up opportunities for tourists to get connecting flights to less-travelled locations in both countries, which would be good for tourism.

Aviation commentator Peter Clark said he was confident the alliance would go ahead.

Air NZ was knocked back in its bid to code-share with Qantas in 2006 because of fears the move would stop competition.

But Mr Clark said the proposed alliance was different because there was no money changing hands. Consumers would benefit because of increased flight options but he doubted it would lead to cheaper fares.

A Commerce Commission spokeswoman said the agency would assess issues relating to competition.

A Ministry of Transport spokeswoman said an official application from Air NZ and Virgin Blue had not been received yesterday.

"Once the ministry has received an application, the next step will be to confirm the details of the process we will follow, including time-frames and opportunities for stakeholders and other interested parties to make their views known."

Reviews of the application for the code-share, which Mr Fyfe said was being lodged last night, are expected to take six months and services are not expected to begin before March.

- NZ Herald

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