Grant Bradley

Aviation, tourism and energy writer for the Business Herald

Alliance tipped to boost visitors

Tourism agency welcomes proposed Qantas-Emirates deal as competition for Air New Zealand.

Emirates operates a daily Kuala Lumpur-Melbourne route, which can then link up with Qantas flights into New Zealand. Photo / Supplied
Emirates operates a daily Kuala Lumpur-Melbourne route, which can then link up with Qantas flights into New Zealand. Photo / Supplied

Government agency Tourism New Zealand says the proposed deal between Emirates and Qantas could bring in more visitors and give Air New Zealand competition on routes where it has enjoyed a monopoly.

But mainly state-owned Air New Zealand said the 10-year Emirates-Qantas deal was open ended and it would be unprecedented for approval of an alliance that included yet-to-be-defined activities or expansion of existing activities.

The deal is now being considered by regulators in Australia and New Zealand's Ministry of Transport.

The airlines needed two separate approvals, one from each jurisdiction, a ministry spokesman said.

"In a hypothetical situation, where the Australian and New Zealand regulators arrived at a different conclusion, the agreement in its current form could not be implemented across the Tasman," he said.

In its submission to the ministry, Tourism New Zealand said the proposed deal was a positive step given the poor performance of Qantas' long haul airline and the potential options it will open up for improved connections for NZ.

An Emirates-Qantas alliance could potentially have as much or greater importance to the tourism sector than Tourism New Zealand's existing partnerships with Singapore Airlines, Qantas and Air New Zealand, the agency said.

While a reduction in Qantas' presence in Europe would eliminate a strong trade partner on the ground, Emirates' multiple gateways would provide New Zealand with more entry points across Europe, which aligns more with customer groups - such as young and premium travellers - and less with geographical locations.

The agreement was likely to improve or create several additional routes that would benefit the country, Tourism New Zealand said.

Emirates operates a daily Kuala Lumpur-Melbourne route, which can then link up with Qantas flights into New Zealand.

At present, Emirates passengers must stay in Melbourne overnight before flying to New Zealand and it was hoped the deal would improve connectivity.

There was also an opportunity for Emirates flights to connect through to Qantas flights into Wellington which would be a further boost, as would the prospect of Qantas flying from Adelaide and Perth to Auckland.

"Air New Zealand has been enjoying [a] monopoly on those routes [Adelaide and Perth] for some time now," the submission said.

Tourism New Zealand said the deal might increase the possibility of either Qantas or Emirates reconsidering the Auckland-Los Angeles route, which the Australian carrier ditched in May as its long-haul operation tanked.

"That would be a hugely significant development," it said. "This agreement effectively gives Emirates/Qantas access to round-the-world routes via Sydney [and] Los Angeles.

"If this adds to the completion on this route the current monopolistic Air New Zealand LA/Auckland sector may appear relatively more expensive."

But like some other submitters, Tourism New Zealand has concerns about transtasman services.

It was important that Qantas, and subsidiary Jetstar, and Emirates were committing to "at least maintain" their current level of transtasman capacity throughout the 10-year term of the agreement, unless certain conditions led to loss of profit or the introduction of new players to market.

As with NZ Airports, Tourism New Zealand is worried that two big airline alliances could lead to a duopoly and "co-ordinated" pricing on the Tasman.

Air New Zealand says although in general it supports alliances - it has a 20 per cent stake in Virgin Australia, a range of alliances and has just done a deal with Cathay Pacific to trim long-haul losses - it has raised several concerns about the Qantas-Emirates deal.

These include how Jetstar fits into the deal, which promotes seamless premium travel and what incentives there are for Emirates to expand long-haul through fares.

It also points out that the alliance, while having 39 per cent of total passengers on the Tasman, would have close to 46 per cent capacity, compared with the Air NZ-Virgin alliance of 50.1 per cent.

Air NZ was also concerned about the effect of the deal on cargo.

- NZ Herald

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