Commission says Air NZ not restricting competition

The Commerce Commission has found Air New Zealand was merely showing a competitive response when it introduced direct flights between Christchurch and Hamilton, following plans by Origin Pacific Airways to do the same.

Origin Pacific had complained to the Commission that Air New Zealand took advantage of its market power to stifle competition by starting the direct flights.

Origin Pacific announced plans on September 1, 2003, to start a direct service between Christchurch and Hamilton -- which would have been the first direct flights between the cities offered by any airlines.

But on September 9, 2003, Air New Zealand announced its own non-stop flights between Christchurch and Hamilton.

Origin Pacific then cancelled its plans to operate the service, claiming it could not viably fly the route alongside Air New Zealand.

Origin Pacific alleged Air New Zealand's behaviour was an abuse of market power and a breach of section 36 the Commerce Act.

Section 36 of the Commerce Act prohibits entities with a substantial degree of market power from taking advantage of that position to prevent or deter competitive conduct by others.

But after investigating the Commission found Air New Zealand's move was a competitive response to a market rival.

" Air New Zealand's behaviour is unlikely to have been materially different from what might have occurred in a competitive market," the Commission said in a statement.

- NZPA