Air NZ prepares for Pacific revamp

By CHRIS DANIELS aviation writer

News of Air New Zealand's "express-style" service to Australia and the Pacific Islands is coming soon, says airline chief executive Ralph Norris.

In a speech to the Institute of Directors in Auckland, he said the airline did not see the status quo as a viable option for services to Australia and the Pacific.

Announcements of the new services are expected within two months, and the likely launch date is October, matching the first deployment of the airline's Airbus A320 planes.

Speaking in support of Air New Zealand's application to join forces with Qantas, Norris said the deal was necessary if New Zealand wanted to continue having a local airline flying long-haul services, and the accompanying investment in tourism promotion.

He described the plan as an "association" and a "joint venture" that would be good for both airlines.

One development that highlighted the need for the alliance was the impending arrival of the Airbus A380 superjumbo, which, when it starts flying, will be the biggest commercial plane in service.

Due to enter airline service in 2006, the A380 will carry up to 555 passengers in a typical three-class configuration.

Norris said Air New Zealand could not justify buying such an aircraft but, in alliance with Qantas, could link New Zealand passengers into a network of the A380 aircraft operating out of Singapore.

Qantas has ordered 12 of the planes, for delivery between 2006 and 2011.

The Commerce Commission is now accepting submissions from those interested in the Qantas-Air New Zealand plan.

Christchurch Airport, in its submission, told the commission that it agreed with the airlines' assessment of what would happen should their applications be denied.

The level of competition with Qantas did not need to be particularly intense to cause serious damage to Air New Zealand, said airport chief executive George Bellew.

Competition regulators on both sides of the Tasman have heaped scorn on the airlines' claims that a destructive "war of attrition" would begin should the status quo remain.

But Bellew, in the Christchurch airport submission, said there was some truth to the claim.

"Qantas, with relatively minimal effort, could place enhanced competitive pressure here and there, and then simply wait for Air New Zealand's ageing fleet to reduce its remaining competitiveness."

Bellew said Air New Zealand would come under intense pressure over the next five years to do something about its ageing fleets.

Wellington Airport, in its submission, said a promise by the two airlines to restrict price increases on the Tasman would be "next to impossible to administer" given the range of prices on any flight.

It also said that Air New Zealand's claims that it faced significant competition on transtasman routes should be seen as applying only to flights out of Auckland.

With the exception of Auckland, Air New Zealand and Qantas would have 100 per cent of the transtasman market.

* Singapore Airlines is adding three more weekly flights to its Auckland-Singapore route, from October 28.

It will then be flying 10 direct services between Auckland and Singapore each week and five from Christchurch.