Aviation leader backs tie-up

By CHRIS DANIELS

One of the most powerful men in world aviation has given his blessing to the planned Air New Zealand-Qantas alliance.

Giovanni Bisignani, director-general and chief executive of the International Air Transport Association (IATA), is in the country this week meeting airlines and politicians.

He told a press briefing in Auckland yesterday that the airline industry was still in crisis and grappling with "three pillars of stagnation" - the bilateral system of organising aviation services between Governments, national ownership rules and competition authorities.

Air New Zealand and Qantas, with all the world's big, full-service airlines, are members of the IATA.

Qantas wants to buy 22.5 per cent of Air NZ and integrate all services operating to, from and within New Zealand, meaning anyone wanting to fly or send freight direct to the United States would have to use one of the two airlines.

Competition regulator the Commerce Commission is holding a conference on the airlines' applications this month.

It expects to issue its final decision on the matter late next month.

Bisignani said airlines across the world had been privatised, yet were still forced to operate in a market constrained by Governments that would not let them fly wherever they wanted, would limit foreign investment, and whose competition regulators would not let them merge and consolidate.

He constantly referred to the issue of airport charges, saying that while airlines lost billions, monopolies such as airports made record profits.

IATA had no problem with airports being privatised, he said, but it should be done only after a suitable regulatory system was established.

In times of trouble, when passenger numbers declined, airports would simply raise landing charges to keep profits up.

He said Wellington Airport's recent 78 per cent rise in charges had been viewed with disbelief by the world's airlines.

"When you see an airport increasing fees by 78 per cent, have you ever seen our fares increase 75 per cent?

"You would start shouting, 'Are you crazy - everything is going down', because here we have a market where you can choose ... "

The level of fee increase at Wellington Airport was unacceptable and its consultation process flawed, he said.

Many of the world's aviation rules dated back 40 years to the birth of the industry, when airlines still flew DC-3 aircraft, said Bisignani.

When competition authorities evaluated mergers, acquisitions or joint ventures between airlines, they tended to take a narrow, traditional approach, considering the market in a limited way rather than "seeing the global picture."

Bisignani said he supported the Air NZ-Qantas alliance.

"I think it's not a merger, it's co-operation.

"It's useful and in the interest of the airlines and its useful for the consumers."

In a speech given in Australia this week, he said "dogmatic competition policies restrict our freedom".

"The industry was too fragmented and needed economies of scale ... The proposed Qantas-Air New Zealand alliance is a clear example of what needs to happen throughout the industry."