Sharechat Logo

Australian regulator grants 3-year extension to Air NZ, Virgin alliance, with conditions

Wednesday 10th July 2013

Text too small?

Australia's antitrust regulator has given approval for Air New Zealand and Virgin Australia to extend their trans-Tasman alliance for three years on the condition they agree to maintain capacity on some secondary routes.

In a draft decision, the Australian Competition and Consumer Commission said weighing up the likely public benefits and detriments of the alliance "was finely balanced" and the regulator was only able to form a preliminary view that the public would be better off by imposing conditions.

The airlines will also be required to provide key performance data to help the regulator assess whether the alliance is having any adverse effects on competition generally, it said. The ACCC said given the dynamic nature of the aviation industry it couldn't agree to a five-year extension the airlines had requested.

"Without the alliance, Virgin Australia's trans-Tasman operations would be more limited than its key competitors and Air New Zealand is likely to be at some competitive disadvantage to the Qantas-Jetstar/Emirates alliance due to its weaker sales presence and more limited access to the domestic market in Australia," the regulator said in its statement.

The alliance probably wouldn't reduce competition on key trans-Tasman routes of Sydney/Melbourne and Auckland, Sydney/Melbourne and Wellington and Sydney-Christchurch.

But the ACCC said it was concerned about competition between Christchurch-Melbourne, Christchurch-Brisbane, Wellington-Brisbane, Queenstown-Brisbane, Auckland-Gold Coast, Dunedin-Sydney, Dunedin-Melbourne and Dunedin Brisbane and wants assurances capacity will be maintained.

The ACCC is now seeking submissions on the draft before making a final decision, it said.

Last month, Air New Zealand lifted its stake in Virgin to about 23 percent from 19.99 percent in a series of off-market transactions, while indicating it may seek to hold as much as 26 percent.

New Zealand's state-controlled airline paid about A$72 million for the shares, with the largest purchase being for 77.4 million shares at 47.68 Australian cents apiece, or A$36.9 million under a forward transaction with Gresham Property Investments.

The New Zealand carrier's shares rose 0.4 percent to $1.445 on the NZX and have gained 11 percent this year. Virgin last traded at 45 Australian cents on the ASX.

BusinessDesk.co.nz

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar sags after avalanche of data and central bank action
Fonterra board starts planning chair succession
Fulton Hogan keeps Australian civil construction unit
Time for congestion pricing has come - NZIER
Colliers defends KiwiBuild as 'far from a colossal failure'
Pushpay shares rise as cost-cutting upgrades earnings guidance
20th September 2019 Morning Report
NZ dollar weaker against British pound on EC president's Brexit optimism
Todd plans Kapuni drilling campaign
MARKET CLOSE: NZ shares gain; appetite for KFC helps Restaurant Brands hit record

IRG See IRG research reports