News

Qantas fumes as Kiwi link ditched

11-04-2003

QANTAS yesterday blasted Australian and New Zealand regulators for ignoring the global airline crisis, after they rejected a $500 million alliance between Qantas and Air New Zealand. Despite the competition watchdogs' draft rulings , Australia's flagship carrier said it would pursue a relationship with Air New Zealand -- and Air New Zealand remained confident of final regulatory approval.

The Federal Government was also hopeful the two airlines could overcome regulators' objections.

The Australian Competition and Consumer Commission and the New Zealand Commerce Commission gave the initial thumbs down for the proposed deal yesterday, saying it would be anti-competitive, offer little public benefit, and lead to higher airfares and reduced service.

Qantas had planned to take a 22.5 per cent, $500 million stake in Air New Zealand and combine services operating to, from or within New Zealand. Chief executive officer Geoff Dixon was scathing in his response to the draft decisions.

"It is remarkable that both authorities appear to have completely ignored the ongoing crisis in the global aviation industry," he said.

He accused competition regulators of pursuing unsustainable ideals and market outcomes, rather than considering commercial realities and long-term restructuring challenges facing the aviation industry.

"It is extraordinary that the NZCC appears to have endorsed government support of airlines, a practice that has only compounded problems in the aviation industry," Mr Dixon said.

"Just as extraordinary is the ACCC's view that there is no national interest benefit, as claimed by Qantas. "

Mr Dixon said airlines worldwide were strained, confirmed by an overnight declaration from German carrier Lufthansa of a "crisis".

Qantas on Wednesday retrenched 1000 workers and warned of further redundancies because of a slump in bookings caused by the Iraq war and the SARS virus.

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