Qantas wins Australian appeal over alliance with Air NZ

By CHRIS DANIELS


Australia's competition authority yesterday gave the thumbs-up to Air New Zealand's planned alliance with Qantas - 22 days after the airlines publicly abandoned the idea.

The airlines are unlikely to revive the plan but Air New Zealand chief executive Ralph Norris claimed that yesterday's decision opened up unspecified "opportunities" for the airline. The Australian Competition Tribunal (ACT) upheld an appeal from Qantas against an earlier rejection of the alliance scheme.

The High Court in New Zealand last month delivered the death knell to the plan, rejecting the airlines' appeal of an earlier Commerce Commission decision.

Norris yesterday said the Australian decision vindicated the airline's appeal in that country.

He had spoken to Qantas counterpart Geoff Dixon and they would look at new ways of co-operating.

"We have been talking about a series of initiatives that we're looking at putting in place between the two companies that would not have been in conflict on either side of the Tasman,"said Norris.

Norris said the ACT decision had not prompted Air NZ to re-activate an appeal against the recent New Zealand High Court decision.

"We're optimistic that the decision on the other side has given us some opportunities that might otherwise not have been available to us."

There were "things that we can do outside New Zealand", he said.

"We just have to make sure that we're squeaky clean."

He would not expand on what these new initiatives might be.

For the alliance to have worked properly, it needed approval on both sides of the Tasman.

Every flight of the two carriers to, from and within New Zealand would have been covered by price and schedule fixing.

Qantas faces vigorous competition at home from Virgin Blue.

Pacific Blue, the low-cost carrier's New Zealand wing, has yet to start domestic services here.

The Australian tribunal gave the green light to the whole proposal, including Qantas buying up to 22.5 per cent of Air NZ.

A competition law partner in the Melbourne office of law firm Phillips Fox Simon Uthmeyer said the ACT decision had given Qantas "vital information on how receptive the tribunal will be to such alliances".

He said the ACT decision meant Qantas could enter into alliances with other, bigger airlines - such as Singapore Airlines or Cathay - since it now knew what competition authorities would approve.

Rejecting the alliance last year, the ACCC Chairman, Graeme Samuel said the scheme would "be highly anti-competitive and offer little benefit to the Australian public."

Deal's history

December 2002: Air NZ and Qantas apply for permission to form an "alliance" - where Qantas buys up to 22.5 per cent of Air NZ shares for $550 million.

September 2003: Australian Competition and Consumer Commission rejects the Qantas application.

October 2003: The New Zealand Commerce Commission rejects the airlines' application

May 2004: Qantas appeals the ACCC rejection to the Australian Competition Tribunal (ACT).

July 2004: Air NZ appeals against the commission's decision to the High Court at Auckland.

September 2004: High Court endorses the commission, rejecting the Air NZ appeal.

October 2004: The ACT upholds Qantas' appeal.