| |
| |
 |
| |
|
| |
|
| |
|
SYDNEY: Australia's corporate watchdog Friday said it would likely reject a proposed alliance between Air New Zealand and Virgin Blue because it could disadvantage more than a million passengers a year.
The Australian Competition and Consumer Commission (ACCC) said it was proposing scuppering the deal, which the airlines said would provide cheaper trans-Tasman flights, on competition grounds.
"The ACCC believes that Virgin Blue is a significant competitor to Air New Zealand and there are a number of trans-Tasman routes where the alliance raises competition concerns," chairman Graeme Samuel said in a statement.
"These routes account for around one quarter of passenger traffic in the trans-Tasman market. This means that more than one million passengers per year may be adversely affected by the removal of competition between Virgin Blue and Air New Zealand."
In May, Air New Zealand and Australian budget carrier Virgin Blue Airlines Group announced the proposed alliance, under which the carriers would coordinate pricing, revenue management, schedules, capacity and routes flown.
The agreement would produce cheaper airfares, increased frequency, better connections, loyalty scheme reciprocity and expanded lounge access, and allow them to compete more effectively against the Qantas-Jetstar group, they said.
But in its draft determination, the ACCC said while it accepted that the alliance would likely result in some of the claimed benefits, it had doubts about the magnitude of these.
"The ACCC is not convinced that this necessarily creates a dynamic in the trans-Tasman market that is fundamentally more competitive than a scenario where Virgin Blue and Air New Zealand continue to operate independently," it said.
Virgin Blue, whose shares fell 4.65 per cent to 41 Australian cents on the news, said it would provide more information to the ACCC to substantiate the public benefits claimed in the application by the cut off date of September 24.
Air New Zealand, which along with Qantas/Jetstar is the dominant player in the Trans-Tasman market, said it was reviewing the draft decision and would also respond to the ACCC's concerns.
The route between Sydney and Auckland is one of the busiest international routes out of Australia, carrying an estimated 5.3 million passengers in 2009.
-AFP/wk
|
