Print

Mail

wiki links

Qantas merger rejected

Gordon Samuel, head of the Australian Competition and Consumer Commission, speaks to a press conference as he holds a report which rejects a revised proposal from Qantas Airways and Air New Zealand to form an alliance, in Sydney yesterday. PHOTO: AFP

Qantas Airways yesterday assailed the Australian competition watchdog for rejecting its proposal for a partial merger with Air New Zealand that had the backing of both governments.

The taking of a strategic 22.5 percent stake in Air New Zealand by Qantas has also been nixed by the New Zealand competition watchdog.

The agencies operate independently and are independent of their governments.

A verdict by the Australian Competition and Consumer Commission (ACCC) that the plan was anti-competitive caused shares in Qantas and Air New Zealand to slump by 4 percent and 12 percent respectively.

The watchdogs worried that a partnership would push up fares and reduce the frequency of services.

Qantas general manager John Borghetti said the ruling postponed a shake-out the industry desperately needed.

"I think the ACCC is avoiding the issue that the airline industry around the world needs to restructure and it needs some significant restructuring," he said.

He maintained that competition was brisk on trans-Tasman routes. Emirates is a recent entrant and discounter Virgin Blue is preparing to join the fray.

Virgin Blue head of commercial operations David Huttner said the airline would push on with its trans-Tasman plans, regardless of any appeal.

"We're going into the New Zealand market and we're looking forward to competing," Huttner said.

Transport Minister John Anderson joined his New Zealand counterpart in criticizing the veto of a deal he said would "ensure stronger locally based carriers" on the trans-Tasman route.

"I support moves by Qantas and other Australian carriers to strengthen their international market position provided that the impact on competition is not to the detriment of travellers," said Anderson, who is also deputy prime minister.

ACCC chairman Graeme Samuel said an alliance "would be highly anti-competitive and offer little benefit to the Australian public."

Air New Zealand managing director Ralph Norris said the airlines were disappointed with the decision and would apply for a review by the Australian Competition Tribunal, adding: "We remain confident that we can achieve a positive outcome."

"Notwithstanding today's decision from the ACCC, I remain as convinced as ever of the need for a strategic alliance between Air New Zealand and Qantas to ensure both New Zealand and Australia retain the critical infrastructure both airlines provide their respective countries' economies," Norris said.

The New Zealand government is majority owner of Air New Zealand, having saved it from bankruptcy in 2001, and Finance Minister Michael Cullen said the ACCC ruling was disappointing but not unexpected.
This story has been viewed 1453 times.