Airfares to drop in open sky deal

By SCOTT MacLEOD transport reporter

International airfares are likely to drop under a long-awaited "open skies" deal between New Zealand and Australia, which would boost tourism and increase flights across the Tasman.

Travellers are likely to face a choice of more routes and frequent services, increased competition for their dollar and lower prices, say travel industry representatives, although no one is willing to estimate the savings.

The agreement ends an existing regime of multiple restrictions on airlines that were imposed by each country to protect its own national carrier.

Government negotiations - revived after former Australian Prime Minister Paul Keating torpedoed the deal at the last minute in 1994 - are likely to produce the open skies arrangement as early as Monday.

It means New Zealand and Australian airlines can fly anywhere within the two countries or beyond, opening up the possibility of new routes and direct competition between the region's carriers.

Travellers should also face fewer airline changes, since they will be able to stay with the same carrier on long-haul routes.

Australian airlines are at present allowed to fly only the equivalent of 12 full jumbo jets out of New Zealand each week, and vice-versa.

Transport Minister Mark Gosche said yesterday that he would fly to Australia on Monday to sign the agreement.

Mr Gosche refused to give details until the signing but confirmed it would give "beyond-rights" to airlines, allowing Qantas and Air New Zealand to compete more on international flights from each other's home country.

The Herald understands the deal will allow the airlines to cut their costs by wiping out bureaucratic red tape that forces them to declare their passenger fares and other details. Restrictions on domestic travel may also be scrapped.

A spokesman for Thomas Cook travel agency, Peter Hansen, said travellers should benefit.

"In the past, when there has been more competition, the prices have dropped," he said. "The real value of an airfare today is a lot cheaper than 10 years ago, and that's partly because of competition."

The president of the Inbound Tour Operators Council, Don Gunn, said the deal sounded like good news for his industry because Australia was becoming an important hub for Asian travellers and was NZ's biggest source of inbound tourists.

Letting Air New Zealand fly more Asians through Australia would help kill seasonal bottlenecks, when tourists from countries such as Indonesia swamped airlines with their numbers.

New Zealand has also just struck a five-way open skies deal with the US, Singapore, Brunei and Chile, and has other deals with the Cook Islands, Samoa, Peru, Luxembourg, Malaysia and the United Arab Emirates.

But the deal is a first for Australia and comes after years of haggling and the occasional wrong step.

Australia's Federal Transport Minister, John Anderson, said: "There are literally open skies and if a New Zealand operator wants to operate backwards and forwards to Australia - or even in Australia - they can, and the same for Australian operators.

"We've got to throw away some of these outdated practices.

"You've got to go beyond some sort of jingoistic attachment to your local carrier."

Stewart Milne, the executive director of New Zealand's Board of Airline Representatives, said the deal capped long-term efforts to open our skies to tourists.

"It has been a long, hard battle and it's very significant," he said. "It's taken a hell of a long time for the Aussies to move."

The two parties that will be most affected by the deal, Air New Zealand and Qantas, were tight-lipped.

Qantas spokeswoman Melissa Thompson said: "We really don't have a comment at all. No comment."