Air New Zealand warns that ACCC alliance rejection could threaten its future

Air New Zealand A320. Photo: Courtesy, Airbus.

Air New Zealand warned that the Australian Competition and Consumer Commission rejection of its alliance with Virgin Blue could threaten the airline's future (ATW Daily News Sept. 13).

Speaking to the National Aviation Press Club in Sydney on Tuesday ANZ CEO Rob Fyfe called the deal with Virgin Blue "a central plank" of its growth strategy. "Obviously the ACCC's preliminary finding represents a threat to this strategy, in effect, a threat to our future."

Referring to the dominance of Qantas and Jetstar on transtasman routes, Fyfe said he believed that the body charged with promoting competition “is at serious risk of killing it off.”

Fyfe said that ANZ has reduced its share on transtasman routes between Australia and New Zealand by 15% over the past two years, while Virgin Group Chairman Richard Branson has warned that if the alliance does not go ahead, he would consider withdrawing from the Tasman; the airline already has left the NZ domestic market (ATW Daily News, Sept. 14).

“It’s one thing to take on the challenge of competing fairly against a dominant market player. It’s quite another to have to compete with one arm tied behind your back,” said Fyfe.

The ACCC maintains that the Blue-ANZ proposed alliance is "likely to reduce competition in the market for transtasman air passenger services." It also questioned the magnitude of the alleged benefits outlined by the two airlines and Blue has acknowledged that its submission could have been better.

Fyfe said that ANZ welcomes the “invitation from the ACCC to present further information in support of our proposal." The New Zealand Ministry of Transport has yet to give its blessing to the deal.