Air NZ told to pay $2m

Air New Zealand has been ordered to pay more than $2 million in legal costs to its opponents in its failed Qantas-Alliance court case.

The airline tried to get Commerce Commission approval for a plan where Qantas would buy a 22.5 per cent stake in Air NZ for $550 million and set up a price- and schedule-fixing deal between the two airlines.

This was refused, since the commission found consumers would be damaged by the alliance. The plan was approved by Australian competition authorities but an Air NZ appeal to the High Court at Auckland failed.

Now the commission and alliance opponents Infratil and Gullivers Pacific have won an application to have Air NZ pay their legal costs.

The commission's total claim against Air NZ was $1,747,796, while Infratil and Gullivers both asked for $300,000. While some of their cost requests were turned down by Justice Rodney Hansen in the High Court, the airline's bill will be more than $2 million.

Infratil is owner of two-thirds of Wellington Airport and opposed any alliance plan. It was joined by Gullivers, which owns the United Travel and Holiday Shoppe franchise brands, and also operates wholesale travel operations and corporate travel agencies.

An airline spokesman said yesterday that the company was deciding whether to appeal against the costs decision.

Air NZ lawyer Jim Farmer, QC, argued in April against the airline having to pay the commission's legal costs. One of his arguments was that the commission's participation in the appeal should be seen as part of its statutory function.

The process of getting a clearance or authorisation to form the alliance was intended to achieve the objects of the Commerce Act.

"A right of appeal is provided; the commission is expected to participate; its costs of doing so should be regarded as having been incurred in the management and administration of the statutory scheme."

Justice Hansen said this was no reason for it not to be entitled to costs. Commission lawyer David Goddard, QC, told the court that costs were routinely awarded to public bodies taking part in litigation.

The commission itself recovered and could be liable for costs in other cases.

"There is no question that the appeal in this case similarly raised issues of general public importance. However, it was initiated and pursued in the private interests of the appellants and I see nothing unjust in their being required to contribute to the costs of the commission."

Air NZ is still trying to stitch up some kind of alliance deal with Qantas, perhaps in the form of a code-sharing arrangement.