Airlines alliance extends the net

By CHRIS DANIELS aviation writer

An application by Air Pacific to become part of the Qantas-Air New Zealand alliance will extend their monopoly to Fiji.

Air New Zealand and Qantas have asked competition regulators on both sides of the Tasman for permission to join forces in a scheme involving Qantas taking a 22 per cent stake in Air New Zealand.

Air Pacific, which flies between Auckland and Fiji 12 times a week, has added its name to the application, asking that it be allowed to join the alliance.

Qantas owns 46 per cent of Air Pacific. The Fijian Government owns 51 per cent.

The news comes days after American carrier United announced it would stop flying between Auckland and Los Angeles at the end of March, leaving only Qantas and Air New Zealand flying non-stop services to the United States.

Air Pacific managing director and chief executive John Campbell said that if the airlines put prices up too high they would open the way for a competitor.

Airlines travelling to and from Fiji depended entirely on tourists for their income, so raising prices would serve only to drive passengers away to other Pacific holiday destinations.

Flight Centre national marketing manager Shane Parlato said Air Pacific joining the Qantas/Air NZ alliance had the potential to seriously damage airline competition in the Pacific.

Air Pacific added its name to the alliance application after it was told by competition regulators that Qantas' shareholding meant it would be considered part of any arrangement that Qantas entered into with Air New Zealand.

"We were told that whether we applied or didn't apply, we'd be considered a party to it," said Campbell.

Qantas codeshares with the airline on flights between Australia and Fiji, but Air Pacific competes with Air New Zealand for passengers flying between New Zealand and Fiji - although the two airlines charge almost exactly the same fares.

Air Pacific's request to regulators came as no surprise to Virgin Blue, the Australian budget carrier seen as the only likely new entrant into the southwest Pacific aviation market.

Virgin Blue's commercial head, David Huttner, said Air Pacific's move meant the three biggest airlines in the region would be part of the same arrangement.

"They are making sure they've got every angle; they've closed the triangle," he said. "There isn't much left. It's just stitching it up for the competition."

Virgin Blue yesterday said it had signed a contract to buy up to 50 new 737 planes from American aircraft maker Boeing. The planes, worth up to $6 billion, will give Virgin Blue the capacity to expand out of its Australian base and into the Pacific.

Huttner said promises from Air NZ and Qantas that they would allow rivals to operate were not enough.

"We'll keep looking at New Zealand, but how we approach the New Zealand market really depends on what sort of structural changes are made to ensure competition. Behavioural undertakings are useless."

A team of Virgin Blue executives is coming to New Zealand next week to discuss the Air New Zealand/Qantas alliance application with the Commerce Commission.

An Air New Zealand spokesman said the addition of Air Pacific to the Commerce Commission application was nothing new.



"It's just to make sure it's transparent, so it doesn't come as a real surprise to anyone."