Concern over airlines' plan
17 April 2006

By JAMES WEIR

Wellington Airport wants the proposed trans-Tasman code-share arrangement between Air New Zealand and Qantas to go before the Commerce Commission.

The airport company has warned that such an arrangement - under which the airlines share planes - would probably mean fewer flights, less choice of airlines and higher fares.

Like the Wellington Chamber of Commerce, it fears the plan could hurt the region.

Air New Zealand and Qantas plan to seek approval from the Transport Ministry, under the Civil Aviation Act, but Transport Minister Pete Hodgson may finally approve the code-share arrangement.

There is no decision yet on whether public submissions will be sought, but the ministry can call on the help of aviation experts.

The airlines are seeking approval from the New Zealand Government and Australian Competition and Consumer Commission to cooperate on trans-Tasman flights, pricing and network, schedule and marketing measures.

Three years ago the commission and High Court blocked a plan to merge the two airlines' New Zealand and trans-Tasman operations.

Wellington International Airport chief executive Simon Draper said that now the airlines were taking a backdoor route through the Transport Ministry for approval.

"They are now proposing a minister of the Crown approve the arrangements, in order to benefit a business which is 80 per cent owned by the Government. That doesn't smell good," Mr Draper said.

The airlines were talking about big cuts in the number of seats available on the Tasman routes.

"Passenger and tourist volumes tend to follow the number of seats made available."

As the remaining flights became more full, prices were likely to rise, he said.

Air New Zealand and Qantas together represented more than 90 per cent market share across the Tasman from Wellington. "That is pretty dominating - Pacific Blue only flies three times a week to Brisbane," Mr Draper said.

Qantas and Air New Zealand were running at load factors of 70 per cent to 80 per cent full, but to get the average to the high 80 per cent to 90 per cent would mean that much of the time flights would be full.

"That has huge impacts on the ability for business to operate from Wellington."

It would make it harder to attract tourists and flights would be more expensive.

Only Air New Zealand and Qantas flew to Sydney, Melbourne and the Gold Coast (Coolangatta).

"The code-share is not looking good for Wellington at all."

Chamber chief executive Charles Finny also fears a code-share arrangement would disadvantage the region.

"There is no one else flying the route (from Wellington to Australia) - there is no strong competition to Air New Zealand and Qantas," Mr Finny said.

"It could be significantly negative for us," he said, with perhaps 20 per cent fewer flights.

The chamber also believed the arrangement should go to the monopoly watchdog for scrutiny.

The decision would affect business in Taranaki, Hawke's Bay, Manawatu, Wairarapa, and the top of the South Island, as well as Wellington - collectively the second largest economy in the country, Mr Finny said.

"It is a significant issue and needs to be given the fullest scrutiny by the experts and they are in the Commerce Commission, not the Ministry of Transport."

The chamber wanted to see more flights out of Wellington and greater freight capacity for the region, not more cuts.

About 20 per cent of New Zealand's live lobster exports come from Wellington, and airfreight also carried other seafoods, flowers and high value manufactured products.

Often firms in the region had to truck exports to Auckland first.

Wellington accounted for about 1 per cent of airfreight, a much lower proportion than in the past.

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