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Air NZ's Fyfe says regulator risks killing competition

Friday 24th September 2010

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Air New Zealand chief executive Rob Fyfe said the Australian antitrust regulator risks ‘killing off’ competition by vetoing the airline’s trans-Tasman alliance with Virgin Blue Holdings.

The Australian Consumer and Competition Commission’s decision leaves the dominant power of Qantas and its cut-price subsidiary Jetstar “completely unchecked,” chief executive Fyfe told shareholders at their annual meeting in Auckland.   

“We believe the regulator charged with promoting competition is at serious risk of killing it off,” Fyfe said.

The decision “effectively puts at risk competition within Australia and across the Tasman”.

Earlier this month the ACCC knocked back a bid from Virgin and Air NZ to allow the airlines to offer code sharing, lower fares and reciprocate on loyalty schemes and airline lounges on trans-Tasman routes. The alliance was put forward in response to Qantas’ two-airline strategy, where Jetstar operates domestic routes in New Zealand, linking to longer-haul flights of the parent.

Fyfe said the end result of the alliance being blocked would result in “marginal routes” being pulled, cutting tourism traffic to the regions.

“The mega-carriers are driven purely by business imperatives; they do not have to factor in national interests,” he said.

“Trans-Tasman traffic accounts for 20% of our business, so pulling out is clearly not an option for us.”

Air NZ and Virgin are reviewing the decision, and have until the end of the year to convince the ACCC to change its mind. The alliance also needs approval from New Zealand’s Ministry of Transport.

The shares fell 0.8% to $1.28 in trading today.

Businesswire.co.nz



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