Air NZ to appeal commerce commission ruling against alliance

Air New Zealand says it will appeal the Commerce Commission ruling against its proposed alliance with Qantas.

Air NZ chairman John Palmer said the national carrier, along with Qantas, had received advice that the commission's decision was seriously flawed.

They lodged their appeal with the High Court today, he said in a statement to the New Zealand Exchange.

Last month, the commission said a tie-up between Air NZ and Qantas would be anti-competitive, restrict tourism rather than boost it, and increase fares for no national benefit.

Under the airlines' proposal, Australian-based Qantas would have taken a 22.5 per cent stake in Air NZ for $550 million, and Air NZ would have gained control of both airlines' flights to, from and within New Zealand.

But today Mr Palmer said both airlines had taken advice from international economists and competition lawyer Jim Farmer QC, that the commission's determination was "seriously flawed".

The "factual and economic evidence provide strong grounds for an appeal," Mr Palmer said.

"Based upon the strength of the legal advice the Air NZ and Qantas boards received, it would have been negligent for the respective boards not to proceed with an appeal," he said.

An Air NZ spokesman said the appeal would cost about $3 million, not including costs associated with appealing the earlier Australian Competition and Consumer Commission decision against the alliance.

The spokesman said most of the legal work had been done and the appeal process was really a rehearing of evidence already tabled.

Air NZ chief executive Ralph Norris said much of the commission's determination was based on analysis, assumptions and information that did not withstand scrutiny.

It did not "bear any resemblance to the commercial realities of the aviation market," Mr Norris said in the statement.

He said the appeal was likely to be heard in mid-2004, and that it would be inappropriate to comment until that time.

Today was the last day for the airlines to appeal the commission ruling. They need approval from the competition watchdogs on both sides of the Tasman for the proposed alliance to progress.

At 4pm, Air NZ shares were unchanged on 46 cents, having traded between 36 cents and 64 cents this year.

- NZPA

Commerce Commission final determination (full report)