Airlines prepare to resume alliance bid

By CHRIS DANIELS aviation writer

Like an old dog rousing itself after a summer sleep, the Air New Zealand-Qantas proposal is awake, as the airlines prepare to once again battle to join forces.

On one side of the fight are the appellants: Air New Zealand and Qantas. On the other are the respondents: listed infrastructure investment company Infratil, along with Wellington mayor Kerry Prendergast, Wellington International Airport (which is 66 per cent owned by Infratil, the rest by the Wellington City Council), the Major Accommodation Providers organisation and Talley's Fisheries.

They will be joined by the Commerce Commission, which last year rejected the Air NZ-Qantas application as being anti-competitive.

The two airlines were also knocked back by the Australian competition regulator, the Australian Competition and Consumer Commission (ACCC).

Lead counsel for the Infratil-led group, Jack Hodder, of law firm Chapman Tripp, said it was unlikely that large amounts of new evidence would be presented to the court in July, but there could be opportunity for evidence presented to the Commerce Commission last year to be updated. Recent developments in the aviation industry could be raised with the court.

The appeal to the High Court in New Zealand, said Hodder, was being made on a "vast number of questions" where the applicants say the Commerce Commission got it wrong when making its decision.

Challenges were being made to the economic methods used to make the decision, along with the way the benefits and detriments of the alliance were worked out.

The airlines are also arguing that there was a "breach of natural justice" in the Commerce Commission's proceedings, as it used an economic model to make a decision that they never got a chance to see.

In about three weeks, the commission will file with the court a full record of how it went about making last year's decision.

This is expected to include details of the model it used, which the airlines will likely try to discredit.

Justice Rodney Hansen has been set down to preside over the case, which is expected to run for at least three weeks. He will be accompanied by Auckland research economist Kerrin Vautier.

They can either uphold the Commerce Commission's decision or say the decision was wrong, thus allowing the alliance to proceed; or thirdly, they could say that things were not done properly the first time, and send it back for reconsideration.

A failure in the High Court would likely be the death of the alliance plan. The airlines would then have to seek leave to appeal further to the Court of Appeal.

The Australian case, before its Competition Tribunal, is set down to start on May 3.

The airlines need regulatory approval from both sides of the Tasman for their deal to succeed.

THE TIMETABLE

The Commerce Commission last year rejected an application for Qantas to buy up to 22.5 per cent of Air NZ for $550 million. The carriers wanted to then jointly control all their flights to, from and within New Zealand. Challenges against these decisions are now proceeding:

May 3: Appeal against ACCC's rejection of the alliance begins. Heard by the Australian Competition Tribunal.

July 5: Appeal to High Court in New Zealand begins in Auckland. Expected to take at least three weeks.