Airlines prepare counter-attack

By CHRIS DANIELS aviation writer

Lawyers are preparing for a court challenge as the Air New Zealand-Qantas alliance epic stretches into its eighth month.

This week marks the deadline for cross-submissions to be made to the Commerce Commission, which has already issued an interim rejection of the airlines' plans.

Cross-submissions, an unusual step for the commission, were introduced to give interested parties more time to consider the latest, voluminous submission from the two airlines.

The commission will hold a week-long conference next month, when all those interested in the plan can make presentations and answer questions.

A final decision is expected to be issued in late September.

This will fire the starter's pistol on legal action, with Qantas expected to appeal to the Australian Competition Tribunal and Air New Zealand to take the matter to the High Court.

Air New Zealand, or any other interested party, can challenge the commission's decision, but only on the grounds of an error in either fact or law.

If the commission goes against its own draft decision and sanctions the alliance, then it is guaranteed a legal challenge from investment company Infratil, 66 per cent owner of Wellington Airport.

"We say and we say strongly and consistently that the commission shouldn't have dealt with the two applications together," said Grant David, a partner at law firm Chapman Tripp, who is representing Infratil and other alliance opponents.

This refers to the two, quite distinct forms of permission that the airlines are seeking.

One is for Qantas to spend up to $550 million buying a 22.5 per cent stake in Air New Zealand. The other is asking for the commission's blessing on an anti-competitive plan to co-ordinate all their flights to, from and within New Zealand.

This would mean, for instance, that every direct flight between New Zealand and the United States would be part of the price-fixing arrangement, because only Air NZ and Qantas fly the route.

David said some could argue for one part of the application, but not both. Benefits were able to be "double-counted", and the commission should not have dealt with the two applications together.

* The cross-submissions deadline is this Friday, with the conference to be held from August 18 to 22 in Wellington.