Qantas hint lifts Air NZ

Air New Zealand shares jumped 4c to $1.38 each amid speculation that a code-share deal with transtasman rival Qantas is near.

The two airlines, barred from a comprehensive merger by the Commerce Commission on competition grounds two years ago, have been trying to stitch together a lesser deal on the Tasman routes.

Both say the presence of a big rival like Emirates has distorted the market, making it difficult to make any money.

"We are looking at areas where we may be able to work with Qantas in the future," said airline spokesman Mike Tod. "However, no agreements have been reached on any co-operation on the Tasman."

Qantas said it had had continuing talks with Air NZ but declined to comment on speculation that the pair planned to merge their transtasman operations.

"We have had continuing discussions with Air NZ on a wide range of issues," a spokesman said. "There is nothing we are prepared to discuss publicly at this stage."

Code-share arrangements between rival airlines must be approved by the Ministry of Transport, but there is some concern that the criteria the ministry will follow when studying an Air NZ-Qantas deal are not clear.

Merger opponents want any potential anti-competitive impacts from code-sharing to be properly dealt with by the ministry, or regulators at the Commerce Commission.

The Government, as 80 per cent owner of Air NZ, supported its plan for an anti-competitive merger with Qantas but let the commission proceed with an investigation and an eventual rejection.

Investment company Infratil, which owns 66 per cent of Wellington Airport, led the charge against Air NZ's attempt to merge most of its operations with Qantas three years ago.

"We remain in no way concerned about Air NZ and Qantas talking about operational matters, but a little disconcerted at media reports that these talks may have wandered into matters where the Commerce Commission and High Court have clearly identified that consumers would be harmed," said Infratil director Tim Brown.

He said Infratil remained "strongly of the view that a competitive aviation market will be good for the travel industry and New Zealand".

Air NZ, under its present management, was taking major steps forward and it would be disappointing if it was held back "by again looking down the dead-end of service links with their major competitor, Qantas".