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'Devil in plan' of Air NZ Qantas tie up

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Yada Yada

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smh.com.au said:
'Devil in plan' of Air NZ Qantas tie up
March 30, 2006 - 7:39AM

Rival airlines say the devil will be in the detail of a secret plan reportedly hatched by Air New Zealand and Qantas to merge their trans-Tasman operations.

A Dominion Post report on Thursday said the pair were close to a deal that would see them work more closely, code-sharing flights in a bid to stave off record fuel costs and huge losses on the route.

Tony Marks, chief executive of rival Pacific Blue, said the move would give Air NZ and Qantas an 80 per cent share of the market. The airlines were likely to offer fewer, larger flights, lessening competition and making price hikes inevitable.

"This particular mechanism has been used before and looks like it is being resurrected from the graveyard," Mr Marks told NZPA.

© 2006 AAP

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straitman

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Yada Yada said:
smh.com.au said:
'Devil in plan' of Air NZ Qantas tie up
March 30, 2006 - 7:39AM

Rival airlines say the devil will be in the detail of a secret plan reportedly hatched by Air New Zealand and Qantas to merge their trans-Tasman operations.

A Dominion Post report on Thursday said the pair were close to a deal that would see them work more closely, code-sharing flights in a bid to stave off record fuel costs and huge losses on the route.

Tony Marks, chief executive of rival Pacific Blue, said the move would give Air NZ and Qantas an 80 per cent share of the market. The airlines were likely to offer fewer, larger flights, lessening competition and making price hikes inevitable.

"This particular mechanism has been used before and looks like it is being resurrected from the graveyard," Mr Marks told NZPA.

© 2006 AAP

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The quote from Tony Marks almost sounds like they have conceeded the battle already. Alternately it could be seen as a plea for sympathy.

Either way this doesn't sound good for the travelling public. :cry: :cry: :x :x
 

serfty

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smh.com.au said:
'Devil in plan' of Air NZ Qantas tie up... Tony Marks, chief executive of rival Pacific Blue, said the move would give Air NZ and Qantas an 80 per cent share of the market. The airlines were likely to offer fewer, larger flights, lessening competition and making price hikes inevitable. ...
One would think that less flights on larger aircraft for QF/NZ would be right down PB's alley, unless he actually talking JI.
 

serfty

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Leumas said:
Kiwi Flyer said:
Not to mention if fares go up DJ has a bigger niche to occupy.
DJ can also put up their prices.
That's why I mentioned JI. That would really put a hole in DJ/BP fares.

This would probably be the main reason Tony Marks is upset. :roll:
 

jakeseven7

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would be weird earning qf ff points on air nz metal... they'd have to do that right?!
 

NM

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jakeseven7 said:
would be weird earning qf ff points on air nz metal... they'd have to do that right?!
They don't have to do anything. However, it is reasonable to expect that you would earn QF FF points and SCs if booked on the QF flight number, and earn nothing if booked on the NZ flight number even if operated by QF.
 

oz_mark

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ACA fears for Tasman air routes

From The Australian, a report on the ACA's perspective on this.

http://www.theaustralian.news.com.au/common/story_page/0,5744,18688726%5E23349,00.html
ACA fears for Tasman air routes
Steve Creedy, Aviation writer
April 03, 2006

QANTAS and Air New Zealand are facing opposition from Australia's top consumer group over plans to code-share on flights across the Tasman, if the deal raises fares and reduces competition.

The Australian Consumers Association said it did not want a return to the days when a lack of competition meant fares to New Zealand were twice as high as they are today.

The airlines, which together control about 80 per cent of the trans-Tasman market, are understood to be close to finalising an agreement to share reservation codes. It would allow them to sell seats on each other's planes and could be formalised this month.

While it would not be as extensive as a merger proposed in 2003, the ACA warned yesterday it could still lead to fewer planes and higher fares, while making it harder for low-cost carrier Pacific Blue to compete.

ACA deputy chief executive Norm Crothers said the risk was that Qantas and Air NZ would create another monopoly. "If you go back 10 years or so, they had a cosy sort of deal where Qantas and Air New Zealand were charging $500 each way across the Tasman," he said.
 

Yada Yada

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Qantas deal must take off this month or we're out - Fyfe

stuff.co.nz said:
Qantas deal must take off this month or we're out - Fyfe
09 April 2006
By TIM HUNTER

Air New Zealand aims to conclude a trans-Tasman deal with Qantas this month or it will walk away from talks, says chief executive Rob Fyfe.

Speculation about a renewed link emerged on March 30, but no details have been confirmed. Code-sharing on trans-Tasman flights, enabling the airlines to sell tickets on each other's aircraft, is thought a likely goal.

"We have five services a day flying Auckland to Sydney," Fyfe told the Sunday Star-Times. "So does Qantas. We typically fly at the same times - wingtip to wingtip. Our aircraft are typically 60-70% full.

"If we pooled our aircraft and rather than flying five times each, we (together) flew eight times a day, we've created a customer benefit - eight flights rather than five flights a day - and the airlines are flying two fewer flights a day, which reduces costs so there are better profits or improved pricing to the customer."

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I don't get what walking away will do if it doesn't happen when they want it to. :roll:
 

JohnK

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Re: Qantas deal must take off this month or we're out - Fyfe

Yada Yada said:
stuff.co.nz said:
"We have five services a day flying Auckland to Sydney," Fyfe told the Sunday Star-Times. "So does Qantas. We typically fly at the same times - wingtip to wingtip. Our aircraft are typically 60-70% full.

"If we pooled our aircraft and rather than flying five times each, we (together) flew eight times a day, we've created a customer benefit - eight flights rather than five flights a day - and the airlines are flying two fewer flights a day, which reduces costs so there are better profits or improved pricing to the customer."
If you each have 5 flights a day and aircraft are 60-70% full then if you reduce to 4 flights a day the aircraft will be 75-88% full (based on flights with ~300-400 passengers).

You don't need a codeshare arrangement to reduce number of flights! Don't schedule flights to leave together but rather an hour later. Have I missed something or is my mathematics that bad?
 

thadocta

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Re: Qantas deal must take off this month or we're out - Fyfe

JohnK said:
If you each have 5 flights a day and aircraft are 60-70% full then if you reduce to 4 flights a day the aircraft will be 75-88% full (based on flights with ~300-400 passengers).

You don't need a codeshare arrangement to reduce number of flights! Don't schedule flights to leave together but rather an hour later. Have I missed something or is my mathematics that bad?
The difference is that by codesharing, you will have eight flights per day, all of which will earn oneworld miles (depending on booking class) or Star Alliance miles.

By reducing the flights each to four per day (without the codeshare) that will leave me as a QF FF with four flights per day. Having four QF flights and four NZ flights (with QF flight numbers) leaves me with eight flights per day.

Presumably, they will get rid of the situation whereby NZ and QF are leaving around the same time, and have a much better spread throughout the day.

Dave
 

JohnK

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Re: Qantas deal must take off this month or we're out - Fyfe

thadocta said:
The difference is that by codesharing, you will have eight flights per day, all of which will earn oneworld miles (depending on booking class) or Star Alliance miles.
I can see how codesharing can help a OneWorld or Star Alliance frequent flyer but I can't see how it will do anything for an airlines bottom line.

The big question is by codesharing would they increase the number of people travelling this route? I don't think so! Would the airfares decrease? I don't think so!

Air NZ and QF, without codesharing, can still reduce their flights to 4 a day, have more passengers per flight, and save costs associated with extra flight.
 

NM

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Re: Qantas deal must take off this month or we're out - Fyfe

JohnK said:
The big question is by codesharing would they increase the number of people travelling this route? I don't think so! Would the airfares decrease? I don't think so!

Air NZ and QF, without codesharing, can still reduce their flights to 4 a day, have more passengers per flight, and save costs associated with extra flight.
By codesharing, there would be 8 aircraft operating the route daily instead of 10. That is a lot less cost to the airlines (fuel, leasing/capital, labour, airport fees etc). Lower costs leads to increased profit and/or lower fares - which one of these wins out depends on pressure from other areas such as competition from other operators.

And by codesaharing, they can schedule the flights to depart at times spread throughout the day. So instead of a choice of 2 carriers with 4 flights departing at say 3 hourly intervals (both carrier's flights departing about the same time), we would have a choice of 8 flights departing at say 1.5 hour intervals. More flight choice to meet my timing/schedule requirements.

So I do agree there is significant benefit to the passengers with greater choice of flight schedules. And there is significant benefit to the airlines in reducing cost. The open question is whether there is enough external influence on airfare pricing from other operators (such as EK, TG, JQ etc) that will result in lower airfares. But even if the fares remain the same, there is benefit to passengers based on greater choice of flight times. The risk is whether the external competition would be low enough that fares may actually rise.
 

serfty

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The rub is in the fact that the overall seating capacity would be reduced. This will, by default, increase demand/competition for these seats and thus ensure each flight has fewer empty seats.

With this NZ/QF will be able to compete more effectively with carriers like Emirates.
 

Kiwi Flyer

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Re: Qantas deal must take off this month or we're out - Fyfe

JohnK said:
thadocta said:
The difference is that by codesharing, you will have eight flights per day, all of which will earn oneworld miles (depending on booking class) or Star Alliance miles.
I can see how codesharing can help a OneWorld or Star Alliance frequent flyer but I can't see how it will do anything for an airlines bottom line.

The big question is by codesharing would they increase the number of people travelling this route? I don't think so! Would the airfares decrease? I don't think so!

Air NZ and QF, without codesharing, can still reduce their flights to 4 a day, have more passengers per flight, and save costs associated with extra flight.
A greater spread of flight times may well increase pax numbers. For example a later flight AKL-SYD would free up seats from the first flight of the next day since many business travellers cannot leave early enough to make the current last flight out.
 

Yada Yada

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From this morning's SMH:

smh.com.au said:
Qantas and Air NZ try another tack
By Scott Rochfort
April 12, 2006

QANTAS and Air New Zealand are getting intimate again for the first time since competition regulators on both sides of the Tasman blocked a proposed alliance between the two in late 2003.

The carriers are today expected to announce plans to code-share services across the Tasman Sea in an attempt to slash costs and counter the perceived excess capacity of airline seats on the route.

In an attempt to sidestep the competition watchdogs this time around, the airlines are expected to argue the deal only encompasses one aspect of their operations, the trans-Tasman route. To drive home their point, Qantas and Air NZ will illustrate the growing competition and what they claim is the continuing "capacity dumping" by Emirates on flights between Austalia and New Zealand.

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So we should hear about it today.
 

Yada Yada

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And here it is...

smh.com.au said:
Qantas, Air NZ sign codeshare agreement
April 12, 2006 - 3:09PM

Qantas has signed an agreement with Air New Zealand that will see the airlines work together on network, schedule, pricing and marketing initiatives for Tasman operations.

The Tasman Networks Agreement (TNA) extends to the airlines value-based subsidiaries Jetstar and Freedom Air.

The agreement, which is subject to an independent audit review, will be specifically limited to the Tasman only.

The airlines said in a statement they will shortly file applications seeking authorisation from the New Zealand Minister of Transport and the Australian Competition and Consumer Commission.

© 2006 AAP

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