Qantas, Air NZ gain extra time

By CHRIS DANIELS

Air New Zealand and Qantas have gained six weeks of breathing space to fine tune their arguments in favour of an alliance.

The Commerce Commission has agreed to the airlines' request for extra time to put together their response to its strong rejection last month of their merger plans.

Each airline is handling the approval process in its country - Air New Zealand is charged with getting it through the Commerce Commission, and Qantas will face the Australian Competitor and Consumer Commission.

The Australian regulator is seen as a much tougher body than the Commerce Commission.

Qantas has asked the ACCC for a quick final decision so it can go to the next step, the Australian Competition Tribunal.

The extra time for the airlines means a final Commerce Commission decision is now not due until September.

Another four weeks have been granted for other interested parties to make "cross submissions".

The Commerce Commission's director of business competition, Geoff Thorn, said the commission recognised that the draft determinations required "a substantive response" from Air NZ and Qantas.

Extra time also meant the commission could test any new information submitted.

Professor Stephen Corones, a competition academic and lawyer with law firm Phillips Fox, said he expected the airlines to provide stronger guarantees on terminal access for Virgin Blue in New Zealand, to allow it to compete on the Tasman route.

Because of Air New Zealand's previous claims that Freedom Air was integral to the airline, Corones said he did not expect it to offer to sell the budget service to get permission to form the alliance.

The ACCC was more focused on promoting competition, and its chairman Alan Fels on protecting the consumer, rather than encouraging economic efficiency, said Corones.

In New Zealand, and with the Australian Competition Tribunal, cost savings and efficiencies carried more weight, and the passing on of such savings to the end consumer was of lesser importance.

Corones said Qantas would have a more difficult job convincing the ACCC than Air NZ would have with the Commerce Commission.

"The chairman of the ACCC has indicated he has fairly strong objections to the proposal as put in the application, and that he sees a very high level of anti-competitive detriment and very little in the way of public benefit."

New timetable

* Submissions due on draft decision - June 20

* Cross submissions due - July 18* Commission conference - August 18-22

* Final decision due by September 30