Rivals defend ‘frenemy’ deal
Airports claim the Air NZ-Qantas code-share agreement on domestic routes may have a bad impact, writes Grant Bradley
Acall to review the Air New Zealand-Qantas domestic code-share has met a mixed response on both sides of the Tasman.
Airports have called on regulators in both countries to review the deal to ensure it does not adversely affect Virgin Australia.
The Commerce Commission said yesterday that based on the “information available” about the code-share, it did not consider it raised issues under the Commerce Act that it intended to look at further.
However, a spokesman for the Australian Competition and Consumer Commission said it did not comment “on potential investigations”.
When they announced the deal, Qantas and Air New Zealand said it did not need regulatory approval, unlike other deeper relationships airlines frequently form.
The Australian Airports Association said the arrangement could reduce competition on both sides of the Tasman.
It has called on competition regulators to ensure the new codeshare agreement between Qantas and Air New Zealand does not hit the travelling public and Virgin Australia.
Airports Association chief executive Caroline Wilkie said the arrangement would lessen competition on both sides of the Tasman and could constrain the important transtasman market and affect tourism.
Virgin Australia’s group executive, Rob Sharp, said he was surprised at the deal, which will start on October 28, the day his airline ends its deeper seven-year alliance with Air New Zealand. The Kiwi airline decided not to renew the arrangement.
“This is not good for consumers in New Zealand. We’ll compete vigorously, we’re a challenger brand and, in due course, we’ll be announcing our product and fare structure,” he told the Herald on the sidelines of the International Air Transport Association (Iata) meeting in Sydney.
“In terms of the regulatory side, it’s a code-share arrangement and they’ve put their view in the market but we’re obviously looking very closely at that.”
The code-share announced on Friday is for travel by Air New Zealand and Qantas within each other’s domestic networks and not across the Tasman where they say they will continue to compete hard.
The code-share will streamline ticketing and bag movement and give eligible passengers access to both airlines’ lounges.
Qantas Group chief executive Alan Joyce said it was ironic that “monopolistic” airports were criticising the deal.
“These carriers are going to be very competitive and nothing’s changed — I only wish airports could be as competitive,” he said at Iata.
“As we said to Air New Zealand, we’re going to be ‘ frenemies’ on this one. We’re going to be very competitive on the Tasman and domestic New Zealand and all the other routes that we compete on.”
There have been concerns that the code-share could mean more Qantas passengers will end up on Air New Zealand flights and Jetstar, which has struggled for profitability here, will find the going even tougher.
Jetstar group chief executive Gareth Evans said it was “110 per cent” committed to New Zealand.
Jetstar would carry the Qantas code if its flights were timed for around the same time as Air New Zealand services, providing incentive for passengers to stay with it.
Also, not a high proportion of passengers connected from transtasman Qantas flights.
Rather than pull back from New Zealand, Jetstar would consider expanding if there was sufficient demand and available aircraft, and Evans urged Kiwis to use the airline.
“We want to make sure the airports in New Zealand and consumers in New Zealand continue to support our work and that’s the best way for us to continue to grow that business.”
Joyce said the “best way of ensuring viability is for all the communities to get behind and support them”.