Boardroom Double Standards Exposed by Air NZ Spat

Boadroom Double Standards Exposed by Air New Zealand Spat

Wed, 28 Aug 2002

About the most fruitful thing to come out so far of the argument over whether Qantas should have a stake of Air NZ, is that the major protagonists are totally conflicted but aren't letting this prevent them parade their self-interest on their sleeve.

This morning we have Wellington airport (aka Lloyd Morrison) and Infratil commissioning a report that argues the government is conflicted - its interests as a shareholder of Air NZ encouraging it toward a deal with Qantas to stop the financial bleeding, while its role as regulator and protector of competition should lead it to avoid giving Qantas a stake.

Well it takes a monopolist to have the cheek to preach competition to others. Already ticked off by the Commerce Commission for monopoly practices Wellington Airport and Infratil were noticeably absent in any opposition to the government decisions to re-nationalise Air NZ and hence reduce private sector competition. Indeed Morrison is on public record as supporting that competition-reducing move as being in the 'national interest' whatever that meant that day. And yet he has the gall to lead a PR campaign by vested interests to prevent Qantas taking a stake in Air NZ, purportedly on the grounds that it "reduces competition". Excuse me, isn't this the pot calling the kettle black?

Next we have the double standard being applied by Michael Cullen. Apparently it was fine for the government to pre-empt a competitive process for the purchase of Air NZ by taking the dominant stake itself, again 'in the national interest'. While such an action was apparently exempt from Commerce Commission scrutiny of its competition-reducing nature, this time around Dr Cullen has said he's happy for the Commerce Commission to scrutinise the part-sale to Qantas. In other words the government applies one rule for itself and another for others - classic hypocrisy.

Finally we have Air NZ CEO Ralph Norris bleating that the airports are usurious monopolies that are bleeding his airline and screwing travellers. The Commerce Commission agrees. That Air NZ has been monopoly pricing on some regional routes has not embarrassed Mr Norris to point the finger.

What is clear from all of this is that the consumer's interest has been left last in the queue behind the vested interest of Air NZ, the airports and the government's political sensitivity. Consumer benefit is best served by total privatisation and an open skies policy allowing all comers to establish the best air transport configuration for NZ. None of the protagonists have called for this.

All we have so far is a low ethical base of corporate vested interest trying through PR spin to manipulate public opinion to their own ends. No wonder corporate and political credibility are treated with such scepticism.

Dr Gareth Morgan
Economist
Infometrics Ltd,
ph (04) 4730 630

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