Air NZ Qantas tie-up worries Australian watchdog

Air New Zealand and Qantas have come under fire from Australia's top consumer advocate, even before a deal to code-share on transTasman flights has been signed.

The Australian Consumers Association (ACA) told The Australian newspaper it did not want a return to the days when a lack of competition meant fares to New Zealand were twice as high as they are today.

The airlines, which together control about 80 per cent of the trans-Tasman market, were reported to be close to finalising an agreement to share reservation codes. It would allow them to sell seats on each other's planes and could be formalised this month.

While it would not be as extensive as a merger proposed in 2003, the ACA warned yesterday it could still lead to fewer planes and higher fares, while making it harder for low-cost carrier Pacific Blue to compete.

ACA deputy chief executive Norm Crothers said the risk was that Qantas and Air NZ would create another monopoly.

"If you go back 10 years or so, they had a cosy sort of deal where Qantas and Air New Zealand were charging A$500 ($587.82) each way across the Tasman," he told the paper.

Finance Minister Michael Cullen confirmed last week code-sharing had been raised in talks but said the Government -- which owns a majority stake in Air NZ following a 2001 bailout -- had yet to receive a final briefing.

Shares in Air NZ closed on Friday at $1.35.

- NZPA