Pressure grows to block Virgin Blue

By Eugene Bingham

By EUGENE BINGHAM

The aviation industry has lined up to urge the Transport Minister to keep Virgin Blue out of New Zealand skies - for now at least.

But negotiations between the budget airline and the Government are on a timetable that could see the first planes in the air within four months.

The news comes as Qantas increased flights between the main centres at the weekend and confirmed plans with Origin Pacific to start extra services between Rotorua, Queenstown and Christchurch in two weeks.

Documents obtained by the Herald under the Official Information Act reveal that Air New Zealand said it would be "galling" if Virgin Blue was allowed to cross the Tasman, while Auckland Airport warned the Government against promising any company swift access.

The flurry of correspondence followed April's collapse of Qantas New Zealand and the subsequent expressions of interest in the New Zealand market from Virgin Blue, owned by British entrepreneur Sir Richard Branson.

Virgin's ownership means it would normally need exemptions from both the New Zealand and Australian Governments to fly the Tasman. Virgin has said it wants to operate domestically as well.

A spokeswoman for Transport Minister Mark Gosche said the Government expected more detailed plans this month and the Branson brand could be airborne by the end of October if Australia and New Zealand said yes.

In May, Auckland Airport chief executive John Goulter wrote to Mr Gosche expressing worry about the implications of new airlines being granted access to the domestic market.

"We are obviously keen to see further developments which provide benefits to all New Zealanders," he wrote. "We are, however, concerned that there be an awareness that we ... cannot automatically and instantly provide the preferred infrastructure as may be required by a new entrant ... "

Mr Goulter told the Herald that his warning applied to any new airline, not just Virgin Blue. "Anybody who turns up may well have to wait some time to get whatever they want."

The airport had still not had any contact from Virgin Blue and was unable to say how long it would take to accommodate Virgin if it was approved.

Air New Zealand chief Gary Toomey wrote to Mr Gosche that his company was opposed to Virgin Blue being allowed to fly the transtasman route - unless Air New Zealand had better access to Europe.

"We are particularly disturbed that Air New Zealand is not being offered any equivalent opportunity for its operations ... for example, between the United Kingdom and Europe," he wrote.

"This is particularly galling when the United Kingdom has continued to reject New Zealand's proposals for open skies, in talks at which Virgin airlines have been represented."

Granting Virgin Blue an exemption would undermine New Zealand's bargaining position with Britain in any future open-skies negotiations.

By the time his letter arrived, Ministry of Transport officials were already arranging for Mr Gosche to phone his British counterparts to see if New Zealand could take advantage of Virgin's proposal.

Mr Gosche discussed with British Aviation Minister Bob Ainsworth the reciprocal exchange of rights that would allow Virgin Blue to operate transtasman services as part of a wider open-skies agreement with Britain.

A ministry paper shows Mr Ainsworth said Britain was willing to talk "but indicated that the UK might not be in a position to agree to anything at this stage."

In its May 11 proposal to the Government, Virgin Blue warned that there was no point in using it to pursue a bilateral agreement with the British "simply on the basis that our major shareholder holds a UK passport."

"Day-to-day operations and control of the airline rests in Australia ... Pursuing this option only suits the needs of one entity - Air New Zealand.

"This is not because they actually believe they will get anything on their wish list from the UK Government.

"It is because they know it will insure [sic] that Virgin Blue will be kept out of a lucrative high-fare local environment indefinitely."

Virgin Blue's proposal outlined plans to initially fly between two unnamed New Zealand cities and the Australian centres of Brisbane and Adelaide.

"Simultaneously we would launch one or two domestic services offering both connections to transtasman passengers and low-fare domestic services on routes that have been underdeveloped.

"If the project meets expectations we would try to add new routes on a regular basis."

Meanwhile, Qantas and Origin Pacific have confirmed plans - first outlined in the Herald in May - to extend Qantas' Auckland-Wellington-Christchurch service using Origin Pacific's smaller Dash-8 aircraft to link Christchurch with Wellington, Queenstown and Rotorua.

Qantas also increased its main trunk flights from yesterday to 10 round trips each day between Auckland and Wellington and eight between Auckland and Christchurch.

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