Flower exports at risk

By CATHY ARONSON

Flower growers and exporters want the Ministry of Transport to stop airlines increasing freight rates by 20 per cent from October.

The industry could lose at least $7 million from its annual $58 million in exports and some growers may not survive the extra costs.

Airlines want to change the way low-density cargo weight is calculated, claiming they are giving away space that could be used for more lucrative heavy exports.

But flower exporters say airlines rely on the lighter cargo to top up revenue.

High-tech and electronic equipment, software and clothing exports would also be affected.

Exporters have accused airline operators of collusion. The International Air Transport Association (Iata) gave notice of its May decision only at the end of June and asked Governments to approve the new guidelines by next week.

Iata membership includes 280 airlines accounting for 95 per cent of worldwide air traffic.

Iata's New Zealand representative, Air New Zealand, has asked the Ministry of Transport to approve the changes to avoid a Commerce Commission challenge.

The changes would relate to all airlines flying from New Zealand.

The ministry does not have to approve the rates, but if it does its decision will become a regulation under the Civil Aviation Act and thus not subject to Commerce Commission scrutiny.

New Zealand's largest flower exporter, Eastern & Global, has questioned whether the Government, as an 82 per cent shareholder in Air NZ, can make regulations that will create a financial return for airlines.

Air NZ is the main carrier to Japan, which takes about 60 per cent of flower exports.

Eastern & Global manager Greg Keymer said the ministry should reject the proposal.

"Surely it's collusion, all airlines fixing the same price with government approval and no Commerce Commission scrutiny."

Ministry infrastructure adviser Ken Hopper said the Civil Aviation Act required that market pressures, market impact and anti-competitive behaviour be considered.

Hopper said the Government's shareholding was not a consideration and the ministry would reach a decision by September 6.

He said that while fare rises were passed through the ministry for consideration, it was unusual for it to rule on cargo rates. If it didn't approve, it would inform the Commerce Commission of its decision.

Airlines determine freight charges on light but bulky cargo by using a volume/weight ratio.

Iata wants to change the standard 6000cc/kg to 5000cc/kg.

An average-sized orchid box holding 64 flowers on eight stems, weighing 3kg but charged as 10kg on bulk, would cost $80 instead of $66.

Flower growers spokeswoman Kathie Henderson said growers and exporters could not pass the increase on to customers. She said exports made up more than half of the $100 million yearly returns for the country's 1800 growers and the extra costs would cause smaller companies to fold.

Air New Zealand would not comment on the proposals and said it was a Ministry of Transport decision.

Iata told the ministry that 747s could now carry an extra 16 tonnes, but most aircraft would reach their freight capacity at about half their weight capability.