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Air New Zealand needs a Plan B

Air New Zealand needs a Plan B

The withdrawal of United Airlines from the Auckland - Los Angeles route is a timely reminder market competition can lead to both cuts and expansion of capacity to satisfy supply and demand, the Employers & Manufacturers Association (Northern) says.

"United Airlines withdrawal means Air New Zealand and Qantas can expect demand for their services to pick up in the short term," said EMA's chief executive Alasdair Thompson.

"However other carriers such American Airlines or British Airways could enter the US leg to capture some of the freight and passenger demand vacated by United, and this would be more likely if Air New Zealand failed to retain competitive rates.

"Hence keeping air line routes contestable is very important.

"Of more concern for our tourism and air freight dependent traders is the development of a Plan B for Air New Zealand for two to three years time. At the moment there isn't one.

"If the world economy fails to lift, and Air New Zealand fails to attract sufficient capital to maintain its international operations its demise as an international airline is on the cards.

"The deal with Qantas is an interim step towards the longer term stability of Air New Zealand though still subject to the approval of our Commerce Commission and the Australian Competition and Consumer Commission (ACCC), which is likely to be tougher than our regulators.

"Even assuming the deal with Qantas is approved, which is by no means certain, Air New Zealand still needs Plan B for its mid term sustainability to reassure investors in our tourism and air cargo industries."

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