Six-week extension on Air NZ/Qantas deal

1.00pm


The Commerce Commission today granted a six-week extension for submissions on its draft ruling on the proposed Air New Zealand-Qantas alliance.

It will now take submissions on the draft until June 20 and cross submissions until July 18. The commission expects to make its final determination by the end of September.

The Commerce Commission and its Australian counterpart, the Australian Competition and Consumer Commission (ACCC), delivered strongly-worded draft determinations on April 10, saying the proposed alliance as it stood was anti-competitive and would offer little benefit to consumers.

Commerce Commission spokesman Geoff Thorn said today the commission was aware its early determination would require a ``substantive response'' from the airlines, and the extension would provide for that.

``It is also important that third parties have time to consider submissions put forward by Qantas and Air New Zealand, and have the opportunity to make cross submissions,'' he said.

``The extended process also provides time for the commission to test any new information that may be submitted.''

Under the proposal, Qantas would pay $550 million for a 22.5 percent stake in Air NZ, and the two airlines would co-ordinate schedules and prices for all domestic flights and international flights to and from New Zealand.

But competition regulators on both sides of the Tasman have said the two airlines would dominate passenger and freight routes between Australia and New Zealand and control the New Zealand domestic market. The tie-up would also cut competition on other New Zealand international flights.

The ACCC warned in its draft ruling that it was hard to see any undertakings making the deal acceptable.

Both airlines have said they would pursue the alliance despite the initial thumbs down.

Qantas chief executive Geoff Dixon said yesterday the ACCC had either ignored or underestimated the challenges facing airlines around the world.

The proposed alliance involved national interest considerations and the authorisation process ``should not focus solely on consumer and competition interests'', Mr Dixon said.

If the ACCC rejects the deal, Qantas could appeal its decision to Australia's competition tribunal, and lawyers have said the process would take about six months.

Meanwhile, Australian media today reported that Qantas is putting pressure on the ACCC to finalise what is expected to be a negative ruling on the quickly, so the airlines can appeal to the Australian Competition Tribunal.

The Australian Financial Review (AFR) said the move was aimed at by-passing the ACCC, which left less room than the New Zealand commission for negotiation in its draft ruling.

Qantas would make a written submission to the ACCC by May 9 in which it would emphasise Virgin Blue's potential as a competitor on trans-Tasman and domestic New Zealand routes, among other issues, the AFR reported.

Virgin Blue has previously said it won't launch a full service in New Zealand without concessions, such as Air NZ being forced to divest its no frills subsidiary Freedom Air and guaranteed access to New Zealand airport terminals at attractive times and rates.

- NZPA