Air NZ likely to revisit Qantas alliance in 2-3 years

1.00pm

Air New Zealand chief executive Ralph Norris said today the airline would revisit its alliance plan with Qantas in two to three years after Australia's competition authority yesterday belatedly approved the now abandoned plan.

The plan that involved Qantas taking a 22 per cent stake and the airlines co-operating on flights to, from and within Air New Zealand, was rejected by the Commerce Commission and an appeal in the High Court.

When the appeal was rejected 22 days ago, Air NZ said it would move on and pursue other ways of co-operation that did not contravene the Commerce Act.

"I think this decision on the Australian side gives us the opportunity to look at a re-application in two or three years to the New Zealand Commerce Commission," Mr Norris told NZPA.

He said the Australian Competition Tribunal decision gave Air NZ more grounds for hope that a fresh application would succeed.

"From where I sit, the analysis that was done in Australia, particularly in relation to the competitive environment, was very sound."

He said even analysing the appeal decision in New Zealand, the High Court determined there were no significant barriers for other airlines to enter the local market. There seven key areas where the commerce commission was over-ruled by the appeal court, he added.

"It was obviously a near run thing."

The deadline for an appeal against the High Court decision is on Friday but Mr Norris said it would be another 12 months before a result.

"There are other ways and means that we can co-operate and we should be getting on with those rather than spending a lot of time going down that path.

"The High Court decision prevented the alliance getting up in its original form so there is no choice but to move on.

"We can revisit the situation in another two to three years."

Centre for Asia Pacific Aviation managing director Peter Harbison told National Radio today that if the alliance plan was revisited it would probably be in a more in-depth form.

Mr Norris interpreted Mr Harbison's comments as saying any new plan would not be limited like the original, but much more comprehensive.

"That is something we haven't considered," Mr Norris said.

He rejected the notion that a plan would need to be nutted out at a political level between the Australian and New Zealand government.

Mr Norris also rejected as cynical the idea that Air NZ had pursued alliance plans as a tactic to stymie full scale competition with Qantas.

"I spent a day-and-a-half on the stand of the Australian Competition Tribunal and certainly I gave it my best shot, so I don't think anybody could legitimately charge that Air New Zealand was just going through the motions."

Asked how he would characterise the relationship between the airlines now, Mr Norris said: "I think it is fair to say that in the marketplace we are strong competitors so there has been no change to the competitive situation.

However, he doubted either airline was doing anything that could be regarded as "stupid" -- a price war had not broken out.

Air NZ in its application to the Commerce Commission opined that Qantas had the financial muscle to crush the New Zealand airline and probably would if it needed to.

Mr Norris said that what had changed since the original alliance plan was proposed 30 months ago, was that Air NZ had become financial much more secure.

"Over the long-run Air New Zealand is going to have to be very nimble. Let's face it, Qantas is three-and-a-half times larger than Air New Zealand -- it's one of the most powerful airlines in the world and it competes with Air New Zealand."

Air NZ shares were unchanged today on $1.63.


- NZPA