Fresh jets pressure share deal

By DANIEL RIORDAN aviation writer

Qantas is expanding its New Zealand operations as Virgin Blue becomes the latest party to air its concerns about a possible koru/kangaroo alliance.

In a long-awaited move, Qantas is adding three Boeing 737-300s to the four it already flies between Auckland, Wellington and Christchurch.

The first of the leased planes will arrive next month, and continue the airline's two-class, full-service operation.

Qantas spokesman Michael Sharp said the seven planes would require 150 cabin crew, 50 cockpit crew and 20 management.

Most will be New Zealanders, and all will be employed by Qantas' New Zealand operating subsidiary, Jetconnect.

The extra planes could indicate that a deal between Qantas and Air NZ may not be as clear-cut as many commentators believe.

Talks between the airlines over operating alliances and Qantas possibly taking a cornerstone stake in the national carrier have been continuing for months.

The cynical view is that an escalation in Qantas' domestic threat will put pressure on the Air NZ board and the Government to do a deal with the Australians.

This view has it that as soon as a deal is done, Qantas will redirect its seven planes to the transtasman route, leaving the domestic market to its new ally's budget service.

Air NZ next week unveils details of its new one-class, no-food service, which will start in October.

Meanwhile, Virgin Blue commercial head David Huttner met Commerce Commission officials yesterday to outline his airline's concerns about Qantas' pricing policies in Australia.

Huttner is also meeting local tourism bodies, airports and the Ministry of Transport as part of Virgin Blue's plans for the New Zealand market, although these appear to be on hold as the airline takes advantage of the Australian opportunities caused by Ansett's demise.

Reluctant to be drawn into the increasingly political debate over Qantas' intentions towards the national carrier, Huttner would only say that the Government's decision to buy into Air NZ "was clearly a good idea".

He said his talks with the commission were informal and positive.

"We wanted to be briefed on the structure of competition predation law in New Zealand, and to make them aware of some of our concerns, based on our experience in Australia.

"We brought to their attention some specific concerns we might have if a Qantas/Air NZ deal or alliance were to move ahead.

"We believe Qantas' behaviour over the last 18 months should raise some questions with the commission. We also put forward the view that while Virgin may benefit by having only one competitor instead of two, we could not understand the consumer case or the public benefit case of allowing such a merger to go through - either New Zealand domestic or transtasman."

Qantas had behaved in a "highly suspect" manner on certain routes in Australia, and on the Adelaide-Brisbane route was being investigated by the Australian Competition and Consumer Commission for allegedly anti-competitive behaviour.

Air NZ's decision a week ago to end domestic services for its discount subsidiary Freedom Air from September 23, while boosting Freedom's services to Virgin Blue's home base of South Queensland, is seen as a provocative act by Virgin Blue.

Huttner said he had raised concerns with the commission that Freedom could be used by Qantas against Virgin Blue in the way Air NZ used Freedom to crush Ewan Wilson's Kiwi Air.

* Sydney Airports has announced that the Star Alliance group of carriers, which includes Singapore Airlines (SIA) and Air NZ, is interested in leasing terminal space, the prelude to any move to start a third domestic carrier. Sydney Airports is about to consider who will get the space formerly used by Ansett.

The Australian media have speculated that SIA is interested in backing a third Australian airline (to be flying by December) but SIA says it has made no such commitment.

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