Air NZ set to cash in on codeshare

A codeshare agreement with Qantas will be good news for Air New Zealand, aviation analysts say, despite a muted reaction to Wednesday's announcement on the stock exchange.

Shares in Air New Zealand remained steady despite the fact the airline is tipped to make savings of about $40 million on the unprofitable Tasman route.

They closed up 1c at $1.31 on Thursday.

"I see this as a win-win scenario for the airlines, the airports and the customers," said Forsyth Barr's Rob Mercer. "Both Air NZ and Qantas gain more from growing traffic on the Tasman into their domestic networks."

Macquarie Bank's Paul Huxford also described the deal as a significant positive for both airlines: "Probably more so for Air New Zealand than Qantas."

But the agreement didn't prompt a lot of investor excitement because it had been widely anticipated and still required regulatory approval, Mercer said.

Codesharing effectively means air travellers booked on Air New Zealand flights could find themselves travelling on a Qantas plane and vice versa.

It is designed to allow the airlines to reduce the large number of empty seats on the route.

While it requires regulatory approval both here and in Australia, it is likely to avoid Commerce Commission scrutiny in New Zealand because there is no equity swap involved in the deal.

It must be approved by the Minister of Transport.

While it was unlikely to get knocked back, the process would still take about six months, Mercer said.

The bigger picture for Air New Zealand was still pretty uncertain in the short-term, he said.

Long-term the outlook wasn't too bad with the low dollar likely to boost tourist numbers into New Zealand, he said.

"But they've still got a lot of work to do to raise profitability and gain investor support."

Despite getting a positive reaction from the Consumers Institute and Tourism Industry Association, the codeshare has raised concerns in some quarters of reduced competition on the Tasman.

The Wellington Chamber of Commerce has argued Wellington Airport could lose out because it does not have as many alternative carriers as are flying out of Auckland.

There are eight airlines flying the Auckland-to-Sydney route which Air NZ chief executive Rob Fyfe has described as one of the most competitive in the world.