The Australian Competition and Consumer Commission today issued a draft decision proposing to deny authorisation* of the Tasman Networks Agreement between Qantas and Air New Zealand.
The agreement would allow Qantas and Air New Zealand to coordinate all activities in respect to any flight on the trans-Tasman, including regular meetings to determine schedules and prices.
Qantas and Air New Zealand are the largest competitors on the trans-Tasman. Combined, they account for around 80 per cent of trans-Tasman passengers. Both operate wholly owned 'low cost carriers' (Jetstar and Freedom Air International) in this market.
"Authorisation of the agreement would fundamentally change the competitive process on the trans-Tasman", ACCC Chairman, Mr Graeme Samuel, said today.
"The ACCC considers that the agreement would only result in limited public benefits in the form of cost savings to the airlines as well as marginal improvements in schedule spread, connectivity and frequent flyer options for consumers.
"The ACCC appreciates that Qantas and Air NZ would continue to be constrained on the trans-Tasman, to some extent, by Virgin Blue and Emirates. However, because these rivals face impediments to further expansion on the trans-Tasman, they will not replace the competitive dynamic that will disappear under the agreement.
"In these circumstances, the limited benefits from the agreement will not outweigh what the ACCC considers will be significant detriment to consumers in the form of higher prices and reduced travel options at key times".
The ACCC is seeking submissions* from interested parties in relation to its draft determination. Submissions can be made to: The General Manager, Adjudication Branch, Australian Competition and Consumer Commission, PO Box 1199, Dickson, ACT, 2602. Submissions can also be lodged by email to email@example.com or facsimile to (02) 6243 1211.