Provinces nervous about merger

By CHRIS DANIELS

A regulatory decision on whether a Qantas-Air New Zealand marriage should proceed has come one step closer, with stage one of the Commerce Commission's process over.

Submissions on the application by the two airlines to stop competing and start co-operating have now closed, with most now posted on the commission's website.

Included in the submissions is one from the Dunedin City Council, which outlines its reservations about the plan.

Marketing and development general manager for the council Peter Brown says that airfares rose dramatically when Ansett New Zealand and then Qantas New Zealand collapsed and stopped flying into Dunedin.

Economy class fares of up to $1200 for a flight to Auckland were common at that time, said Brown, a time he describes as being "a virtual monopoly for Air New Zealand".

Fare price rises and cuts in service for the city were possible if Air New Zealand and Qantas joined forces. There was no guarantee Virgin Blue would fly to New Zealand, and if it did, that it would fly to Dunedin.

Similar concerns over smaller airports being shut out by the Air New Zealand-Qantas plan were outlined by Palmerston North Airport in its submission to the Commerce Commission.

Chief executive Garry Goodman said any loss of competition in the New Zealand domestic network would negatively affect regional centres such as Palmerston North.

A submission from the New Zealand Export Orchid Growers Association, whose members have an annual airfreight bill of $14 million, says the alliance would mean higher freight rates.

"We expect the outcome will be higher freight rates, less choice and possibly less available freight-space," said the association.

"We believe that in the debate over the future of our national carrier, freight is often overlooked in favour of the more high-profile passenger service."

A commission spokeswoman said she expected between 40 and 50 submissions to be made at this stage of the process. This number does not include a mass-produced postcard, designed by opponents of the plan.

Sixty-five of these cards have already arrived at the commission and will be considered alongside all the others.

A draft decision on the Air New Zealand-Qantas application is not expected for another eight weeks. Then another round of submissions is called for, followed by a public conference - possibly in May.

The final decision will follow some time after that.