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Air New Zealand fends off competition

Air New Zealand will make major changes to allow it to meet tough competition in its main market from three new entrants -- Virgin Blue, Emirates and Royal Brunei airlines, the carrier's boss said yesterday.

"I would suggest that unless we make some significant changes to the way that we operate our Tasman services then we would be risking losing significant amounts of money," Chief executive Ralph Norris told Australia's Network Nine television.

Norris refused to discuss proposed changes.

"Watch this space," he said.

The entrance of the three new airlines on the route across the Tasman Sea, between Australia and New Zealand, would increase seat numbers by 40 percent, he said.

Emirates began flying to New Zealand from Dubai last Friday as an extension of its daily flights to Sydney and Melbourne. British entrepreneur Richard Branson's budget Australian airline Virgin Blue has applied to start flying the trans-Tasman route from October. Royal Brunei will begin flights in October.

Norris said he was not expecting a price war on the route, but added that the main requirement of customers today is "price, price, price."

"Certainly the prognosis going forward is that it's not really going to be a market that is going to make you rich," he said.

Norris said one of the carrier's other main priorities was to convince Australia and New Zealand antitrust regulators to approve an alliance with Australian flag carrier Qantas Airways.

Regulators in both countries said in April that the proposed merger would be anticompetitive and could lead to higher airfares and freight costs. They asked the airlines to present new arguments which are now being assessed.

"We're doing everything we can, obviously within reason, to get the alliance up," Norris said.

The two airlines announced a proposed partnership deal late last year where Qantas would buy a 22.5 percent stake in Air New Zealand for NZ$550 million (US$308 million).
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