Air NZ and Qantas proposal a competitive response, backers say

1.00pm

An alliance between Air New Zealand and Qantas was a competitive response rather than an attempt to act anti-competitively, the High Court in Auckland heard today.

Air New Zealand solictor Jim Farmer, QC, former acting chairman of the airline, told the hearing of an appeal against a Commerce Commission ruling last year. The commission rejected the alliance proposed in the wake of the September 11 2001 terrorist attack on the World Trade Centre, increased fuel costs, and industry shocks.

He told Justice Rodney Hansen low-cost carriers and competition had also raised the need for Qantas and Air New Zealand to lower their own costs and restore a competitive position, rapidly eroded by newcomers such as Virgin Blue and Emirates.

He was opening Air New Zealand submission in its appeal against the New Zealand Commerce Commission ruling last year which rejected a plan for Qantas to take 22.5 per cent of Air New Zealand for $550 million dollars.

The alliance would give the two airlines 60 per cent of the trans-Tasman route and 100 per cent on flights between New Zealand and North America which only Qantas and Air New Zealand fly.

The Australian competition tribunal also heard an appeal by Qantas last month after Australian competition regulators rejected the plan last year.

Opponents include the Commerce Commission and the airport investment company Infratil which were expected to argue that new evidence of hardship brought about by world events should be brought before the commission in a new application and not the High court.

The hearing is expected to take about four weeks. The High Court decision was expected later this year, about the same time as the ruling from the Australian competition tribunal on the Qantas appeal.

- NZPA