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Air NZ to lose its Freedom

Friday 4th April 2003

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Reports in the Australian media claim that Air New Zealand will have to sell its low-cost subsidiary Freedom Air in order to gain regulatory approval for its Qantas tie-up.

Air New Zealand will be forced sell its low-cost subsidiary Freedom Air and make available check-in facilities at Auckland Airport to Virgin Blue to gain regulatory approval for its proposed tie-up with Qantas, industry sources quoted in The Age claim.

These are two of the concessions expected to be outlined when the Commerce Commission and the Australian Consumer and Competition Commission release draft determinations on April 10.

Under the deal proposed in November Qantas will take a 22.5% stake in Air New Zealand for NZ$550 million (A$505 million).

The first transaction in the three stage deal took place in December when Qantas acquired a 4.99% stake in Air New Zealand.

The deal was seen by regulators to largely eliminate competition between Australia and New Zealand.

Competitor Virgin Blue, is pushing the line that for the deal to go ahead Air New Zealand must sell Freedom Air.

The Age reports that competition regulators are expected to accede to Virgin Blue's request that Air New Zealand not be permitted to start another low-fare airline for three years, and must give up some check-in counters at Auckland Airport.

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