Qantas flies into flak in air wars

By DANIEL RIORDAN

Qantas is refusing to comment on Air New Zealand's claims that the Australian carrier will lose $40 million to $50 million this year by running low-fare operations in New Zealand.

Air New Zealand managing director Ralph Norris, who made the claim in a National Business Review interview published yesterday, said his airline was still considering making a predatory pricing claim against Qantas.

He accepted Air New Zealand would have difficulty proving such a claim because Qantas has only a 20 per cent market share compared with Air New Zealand's 70 per cent.

Qantas flies four planes on main trunk routes, offering fares well below those of Air New Zealand.

Qantas spokesman Michael Sharp would only repeat that Qantas was not in business to lose money.

The Australian airline said it planned to boost its local operations but has not given a timeframe for the expansion.

Norris was loath to indicate what changes Air New Zealand was considering because of the danger of tipping off its Australian rival.

But he said one option was to introduce more cut-price services - an idea already attracting flak from unions.

He said the airline hoped to have a plan for its domestic and South West Pacific network within six to eight weeks.

Management has yet to present any recommendations to the board, which meets early next month.

Speaking on National Radio, Norris agreed with International Air Transport Association chief economist Peter Morris that slashing seat prices rather than cutting flights would worsen the problems of airlines.

He said yields were already too low, and fares were lower than they should be.

"We've got to make sure we don't end up in a situation such as happened at Ansett - locked in a high-cost structure, not able to move very quickly, because of union arrangements etc that saw it unable to move its cost base down fast enough to compete in a very competitive environment.

"We have to make sure that Air New Zealand has the flexibility to enable us to respond to competition."

nzherald.co.nz/aviation

nzherald.co.nz/travel