Union calls for govt action on air alliance

The union representing more than 3000 Air New Zealand employees in engineering, ground handling and reservations says that governments on both sides of the Tasman should make sure the proposed Qantas/Air New Zealand alliance goes ahead.

EPMU national secretary Andrew Little said that jobs could be as risk if the alliance is not approved.

Yesterday, the ACCC declined the application by Qantas and Air New Zealand to form an alliance and share operations on the trans-Tasman route. The New Zealand Commerce Commission has yet to rule on a similar application covering New Zealand domestic services and trans-Pacific services.

“We do not believe that, given Qantas’s poor financial result recently, it will continue to prop up an unprofitable domestic service in New Zealand and a marginal trans-Tasman service”, M rLittle said.

“The options for Qantas are to compete more aggressively in New Zealand and across the Tasman. Air New Zealand would have to match that competition, along with the competition created by Virgin Blue’s entry to the service.

“With Virgin Blue also planning to operate domestically in New Zealand, the only likely prospect for Air New Zealand to maintain its volume and viability would be to drive further cost out of the business and effectively become a value-based airline (VBA)”.

“The model that some VBAs operate on overseas involves passengers carrying their luggage to aeroplanes and no catering facilities, even for a cup of tea, on board.

“Very few VBAs overseas run their own engineering operation, and it is conceivable that, in the medium-term, Air New Zealand would have to divest itself of its engineering services, raising questions about whether that work would remain in New Zealand and continue to be part of the skills infrastructure of this country”.

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