leemin
Active Member
- Joined
- Jan 24, 2011
- Posts
- 508
- Qantas
- Gold
- Virgin
- Platinum
As reported in The Oz today:
Puffing of chests or serious threat?
Virgin Australia and Air New Zealand want the competition regulator to lift a restriction requiring them to maintain capacity across the Tasman and have warned they will "immediately unwind" their partnership if it is not reauthorised at the end of the year.
The airlines have applied to the Australian Competition & Consumer Commission to have their trans-Tasman joint venture, approval for which expires in December, extended for a further five years.
They warn they will immediately take steps to unwind the alliance if reauthorisation is not granted, a move they argue would see them cut capacity to reflect reduced demand.
They say in their application to the ACCC there is evidence of substantial public benefits from the alliance, including increased access to existing flight frequencies, a rise in online connection options and a better schedule spread. They argue they have delivered substantial public benefits "without any anti-competitive detriment on the Tasman or on any individual route".
This includes an increase in the volume and proportion of lead-in and sales fares sold on flights, although they claim commercial confidentiality and do not make public the reduction on average fares.
Capacity on the Tasman also increased by 5 per cent in "a highly competitive market characterised by substantial capacity and strong fare competition".
However, they argue that the conditions under the original deal requiring the airlines to maintain a basic level of capacity are no longer necessary.
These could create significant distortions and inefficiencies in the provision of trans-Tasman services that could increase costs and be to the detriment of consumers.
They also reduce the ability of the applicants to respond flexibly to changes in demand, with the partners noting regulators took six months to respond to a request to vary flights after the Christchurch earthquake in 2011.
But the airlines contend minimum capacity requirements should be retained for rivals Qantas-Emirates.
The ACCC has given Qantas-Emirates the green light providing the alliance maintains capacity on four key routes. The airlines have yet to receive the go-ahead from the New Zealand competition regulator.
"Notwithstanding, where the net public benefit position is finely balanced, such capacity conditions are appropriate so as to deliver the overall net public benefit," the submission says.
"This is particularly true where there is already substantial capacity in the market and in the potential simultaneous capacity conditions on the overlapping routes of Qantas and Emirates."
Virgin is still awaiting ACCC approval for its move to buy a 60 per cent stake in Tiger Airways Australia, a move that has raised concerns it would create an entrenched airline duopoly but could see the demise of the low-cost carrier if it is not permitted.
Puffing of chests or serious threat?
