Codeshare sparked by legal failure: Fyfe
16 April 2006

By TIM HUNTER

Air New Zealand considered legal action against foreign airlines for alleged capacity dumping on the Tasman route, but gave it up in favour of a codeshare deal with Qantas, says CEO Rob Fyfe.

On Wednesday, Air NZ announced a plan to share trans-Tasman aircraft with Qantas, a move it said would reduce costs and cut fuel consumption on the route by about 6%.

The airline said anti-competitive codesharing was necessary because foreign airlines such as Emirates were charging below-cost fares to sell seats on aircraft that would otherwise lie idle between long-haul flights.

"We've explored our legal options," he told the Sunday Star-Times last week. "It's something I've raised in the past couple of months at a political level and a legal level."

Fyfe said that although the law gave protection to firms such as Fisher & Paykel, which won sanctions against Korean whiteware makers dumping products in New Zealand, there were big obstacles for an Air NZ complaint.

There was a problem of jurisdiction over an international service, and the law also assumed dumping occurred only as an abuse of a dominant market position.

"There's an inconsistency that the Commerce Commission has no jurisdiction to review Emirates behaviour on the Tasman but people want it to review our response to that," said Fyfe.

Eleven airlines fly the Tasman route, including Air NZ's Freedom Air and Qantas's JetStar.

But although Auckland and Christchurch are well-served, few airlines fly from Wellington.

Fyfe said that did not mean Air NZ and Qantas would take advantage.

"I don't believe it's appropriate or viable for us to price Wellington services out of kilter with the rest of the market. If you did that people would start going through Christchurch or Auckland."

The Air NZ/Qantas price fixing code share requires approval from the transport minister in New Zealand and the Australian Competition and Consumer Commission.

The commission runs a public review process inviting submissions on whether the anti-competitive codeshare plan is in the public interest.

A New Zealand transport ministry spokesman said it had not been decided whether the ministry would seek public submissions on the plan.

http://www.stuff.co.nz/stuff/sundays...1a6445,00.html