Qantas, Air NZ seat deal tipped

A code-share deal between Qantas and Air NZ is likely to emerge from the ashes of their failed alliance plan, with the release of a long-awaited Australian Competition Tribunal ruling.

More than 200 pages of dense legal opinion is now being analysed by the two airlines, who have been waiting almost six months for the decision before making any more moves.

Last year, the tribunal okayed the planned alliance shortly after New Zealand competition regulators had turned the deal down.

A code-share is where each airline buys seats on another, which means Qantas could stop flying to Wellington at peak business times, its customers travelling by Air NZ instead. Prices would - on the face of it at least - not be "fixed" between the two but would allow each to charge the same rates. Schedules could also be changed in such as way as to benefit the other airline.

Crucial to the deal will be the operations of Qantas' low-cost brand, Jetstar, run on similar lines to Air NZ's Freedom, which is expected to start flying the Tasman soon.

Qantas could hand over the Tasman business traveller market to Air NZ, which has a lower cost structure, while putting Australian tourists and leisure travellers on Jetstar.

Air NZ and Qantas could compete vigorously on some routes, but enjoy a duopoly on others.

Prices on the Tasman would not necessarily rise, since the tribunal says the competitive constraint of Pacific Blue and Emirates should be enough to stop Air NZ and Qantas raising prices too high.

It is possible that Air NZ, as a member of the Star Alliance, would be allowed to code-share with airlines that are not in the same alliance.

Air NZ chief executive Ralph Norris said last year that the two airlines had been looking at ways of co-operating that did not breach competition rules.

"We have been talking about a series of initiatives that we're looking at putting in place between the two companies that would not have been in conflict on either side of the Tasman," he said. "We're optimistic that the decision on the other side has given us some opportunities that might otherwise not have been available to us."

Norris said there were "things we can do outside New Zealand. We just have to make sure that we're squeaky clean."

An Air NZ spokesman said no more comment would be made on the decision until at least next week.