Air NZ close to Qantas merger deal, report says

Air New Zealand and Qantas are in talks about merging their Tasman operations in an effort to curb record fuel costs and large losses on the route, according to a report today.

An anti-competitive alliance covering international and domestic services was rejected by competition watchdogs in Australia and New Zealand in 2003.

Australian authorities have since approved the deal on appeal, but the High Court in New Zealand did not.

But sources in Wellington told The Dominion Post they were aware of a plan for the two airlines to work together more closely, including code-sharing.

Maintenance and ground handling services may also be shared.

The Commerce Commission and Ministry of Transport said they both had not yet been notified of a deal.

Air New Zealand said "it would be inappropriate for Air new Zealand to comment", when asked if a deal had been struck.

However, chief executive Rob Fyfe said in Australia this week that the airlines were "practically code-sharing on the Tasman in the 1990s and that worked quite effectively".

The code-sharing agreement ended acrimoniously six years later.

He said recently the airlines had continued to talk about "collaboration" on the Tasman.

Any new agreement is likely to centre around a similar airshare agreement through which the airlines sell seats on each other's aircraft, allowing them to replace competing flights that departed within minutes of each other with a single, possibly larger aircraft.

- NZPA