Import News: Feedback on Air NZ/Qantas

Import News from the Importers Institute

12 December 2002 - Feedback on Air NZ/Qantas

Items of Import News are published in our website, http://www.silva.co.nz/institute/artices.asp. We invite and welcome replies and comments from readers. The following were received in response to our recent article opposing the proposed alliance between Air New Zealand and Qantas:

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[From the Hon Trevor Mallard, Associate Minister of Finance]

The Government has not made any decisions on the merits of the proposal. It will make an in-principle decision by December 18. This will either end the matter, or subject it to the full scrutiny of the Commerce Commission in New Zealand and of the Australian Competition and Consumer Commission across the Tasman.

The Government will consider the proposal from two perspectives: as the principal shareholder in Air New Zealand and as the guardian of the national interest. As principal shareholder, it will have to assess whether the proposed alliance is in the best interests of Air New Zealand.

As guardian of the national interest, it will take into account a range of considerations. These will include but may not be limited to:

* ensuring effective control of Air New Zealand remains in the hands of New Zealand nationals;

* protecting Air New Zealand's ability to exercise New Zealand's existing and future air rights;

* preserving the unique New Zealand identity of Air New Zealand;

* providing effective channels for international tourism and travel;

* providing a durable domestic air services network; and

* preserving New Zealand based employment.

Even if the proposal satisfies all of these tests, it will still have to be cleared by both the Commerce Commission and the Australian Competition and Consumer Commission. The Labour-led Government has strengthened New Zealand's competition law to make it one of the strongest regimes in the world.

The Government has advised both airlines that the proposal will have to satisfy all the normal competition criteria. We will not legislate to remove, or even lower, any of these hurdles.

The Government is not going to make a decision that compromises our majority ownership; nor is it going to agree to anything that adversely affects Air New Zealand's current and long term potential contribution to New Zealand's economic interests.

Trevor Mallard Associate Minister of Finance

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[From Professor Chris Kissling, Lincoln University]

Ownership of airlines is a vexed question. The New Zealand Government can happily allow 100% foreign ownership of a domestic carrier but that carrier cannot fly internationally as the rules of the game now apply internationally. The Transportation Working Group of APEC have been pressing for "more competitive international aviation" which means "Liberalisation" for a long time but there are still governments content to protect their inefficient carriers from full competition not to upset domestic electorates and work forces involved. Open Skies will come eventually but I would bet some APEC economies will resist till 2020 when free trade is meant to be embraced by them all, including trade in services that includes aviation.

Prof Chris Kissling, Lincoln University PECC (Pacific Economic Cooperation Council) Official Observer at APEC Transportation Working Group

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