Post by corsair67 on Nov 6, 2006 10:23:12 GMT 12
Looks like this deal might be on the rocks?
From The Australian.
Qantas-NZ deal rejected
Steve Creedy, Aviation writer
November 04, 2006.
AIR New Zealand warned last night it would be forced to slash flights across the Tasman after Australia's competition watchdog moved to scotch a proposed price-fixing deal with Qantas.
The airlines wanted a deal that would give them 80 per cent of the trans-Tasman market, Australia's busiest overseas route, and allow them to co-ordinate routes, aircraft, schedules and fares.
They argued that competition between each other, and from carriers such as Emirates and Virgin Blue, meant there was too much capacity on the route and that hampered their ability to operate it profitably.
They claimed the deal would benefit consumers, but opponents, including travel agents, argued it would lead to significantly higher fares.
A long-awaited Australian Competition and Consumer Commission draft decision released yesterday said the deal would give the airlines too much market power for too few benefits and would "fundamentally change the competitive process on the trans-Tasman".
ACCC chairman Graeme Samuel said the deal would produce only limited public benefits in the form of cost savings to the airlines as well as marginal improvements to schedules, connectivity and frequent flyer options. He said the commission saw the anti-competitive detriments as being significant but the public benefits as only small.
Mr Samuel said the commission's analysis showed that Virgin Blue and Emirates had only a limited capacity to grow their services beyond current levels, particularly in the business market. "Business people tend to focus much less on price and much more on flexibility and, of course, there are high barriers to entry for Virgin, Emirates and the others to meet that flexibility in terms of scheduling," he said.
"And if you remove the capacity and scheduling and competition between Air New Zealand and Qantas, then you're into even greater problems."
Qantas chief executive Geoff Dixon issued a terse statement, saying he was not surprised at the decision "given the ACCC's track record on this issue".
But AirNZ said it was "flabbergasted and astounded" and claimed it had already spotted flaws in the draft document.
"If the ACCC sticks with this determination it is potentially forcing Air New Zealand to make capacity and route decisions that will come at a significant cost to consumers," said chief financial officer Rob McDonald.
Mr McDonald said the poor performance of Qantas and AirNZ on the Tasman was well documented and the commission was misguided if it thought airlines would keep pouring tens of millions of dollars into underperforming routes.
The ACCC will seek further comments on the proposal before delivering a final decision early in the new year and AirNZ has indicated it will attempt to address the commission's concerns.
From The Australian.
Qantas-NZ deal rejected
Steve Creedy, Aviation writer
November 04, 2006.
AIR New Zealand warned last night it would be forced to slash flights across the Tasman after Australia's competition watchdog moved to scotch a proposed price-fixing deal with Qantas.
The airlines wanted a deal that would give them 80 per cent of the trans-Tasman market, Australia's busiest overseas route, and allow them to co-ordinate routes, aircraft, schedules and fares.
They argued that competition between each other, and from carriers such as Emirates and Virgin Blue, meant there was too much capacity on the route and that hampered their ability to operate it profitably.
They claimed the deal would benefit consumers, but opponents, including travel agents, argued it would lead to significantly higher fares.
A long-awaited Australian Competition and Consumer Commission draft decision released yesterday said the deal would give the airlines too much market power for too few benefits and would "fundamentally change the competitive process on the trans-Tasman".
ACCC chairman Graeme Samuel said the deal would produce only limited public benefits in the form of cost savings to the airlines as well as marginal improvements to schedules, connectivity and frequent flyer options. He said the commission saw the anti-competitive detriments as being significant but the public benefits as only small.
Mr Samuel said the commission's analysis showed that Virgin Blue and Emirates had only a limited capacity to grow their services beyond current levels, particularly in the business market. "Business people tend to focus much less on price and much more on flexibility and, of course, there are high barriers to entry for Virgin, Emirates and the others to meet that flexibility in terms of scheduling," he said.
"And if you remove the capacity and scheduling and competition between Air New Zealand and Qantas, then you're into even greater problems."
Qantas chief executive Geoff Dixon issued a terse statement, saying he was not surprised at the decision "given the ACCC's track record on this issue".
But AirNZ said it was "flabbergasted and astounded" and claimed it had already spotted flaws in the draft document.
"If the ACCC sticks with this determination it is potentially forcing Air New Zealand to make capacity and route decisions that will come at a significant cost to consumers," said chief financial officer Rob McDonald.
Mr McDonald said the poor performance of Qantas and AirNZ on the Tasman was well documented and the commission was misguided if it thought airlines would keep pouring tens of millions of dollars into underperforming routes.
The ACCC will seek further comments on the proposal before delivering a final decision early in the new year and AirNZ has indicated it will attempt to address the commission's concerns.
