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Saving Air NZ: Air NZ & Qantas - Good Or Bad?

Note: Scoop's Editors are supporters of the Save Air New Zealand campaign...

Air New Zealand & Qantas: Good Or Bad?

Update #4 Of The Save Air New Zealand Campaign

Over the next week the airlines are to explain to the Commerce Commission why their merger will be a “good” and a miscellany of opponents will explain why it is a “bad”.

Four commissioners of the Commerce Commission will listen to it all and ask an occasional question. Don’t expect great illumination. Much of the discussion be on the proverbial head of the pin and, in any case, “confidential” and not available for external comment.

The Commerce Commission review of this merger will not be a case of “justice being seen to have been done”. Not only is key information not being made available, and the process bias towards “experts”, the Commission’s figuring is done by impenetrable computer models. It works like this; experts haggle over whether the merger means airfares on the Tasman fall 12.37% or rise 46.8%. The Commission makes a choice, say, “increase 23.3%” and this gets fed into the computer model. Then the experts haggle over the next variable and again a selected outcome is fed into the model. After all the variables are inserted the button is pushed and “presto” we find out if the merger is a “good” or a “bad”.

While this approach is terribly rigorous it is also opaque, the realm of experts (read, lawyers and professors charging $5,000 to $10,000 a day) and means that an individual traveller or tourist business owner really hasn’t got a clue as to whether their perspective has been noticed or fed into the machine.

Such an individual has good reason to be concerned and sceptical. At the conference the airlines get 3 and a half days. The well funded opponents; Virgin Blue, Infratil and Gullivers Travel have a day between them. The Consumers’ Institute and the Save Air New Zealand group get half an hour each on Friday afternoon.

In a very real sense the “man in the street”, the very person that the Commerce Commission is meant to look after, is the one person without a say. As with a murder trial only the victim doesn’t get heard, but, of course, will be at the forefront of the commissioners’ minds as they deliberate. In that context they will certainly be constantly thinking about the real issues:

What does it mean for consumers?

  • Air New Zealand “Express” means a flight to Australia costs $200 rather than $375. Auckland-Wellington $100 rather than $200 and Wellington-Christchurch $60 rather than $125. Win-win. A better deal for travellers and more profit for AirNZ as more people are flying.

  • There is not one iota of evidence that AirNZ would have instigated these changes without competitive pressure from Qantas and Virgin Blue.
  • What does it mean for AirNZ?

  • Qantas and the Australian government are not altruistic in wanting the AirNZ deal. They only want it to stifle competition. Over the 15 years since AirNZ was privatised Qantas has successfully campaigned to keep AirNZ in its box. The previous chairman of AirNZ, Jim Farmer QC, described how Qantas and the Australian Government stymied AirNZ’s expansion into Australia except via the crippled Ansett and then stopped AirNZ getting support from Singapore Airlines, which directly resulted in the New Zealand Government having to inject $850million.
  • The commissioners will, for sure, measure all the week’s arguments against the dual criteria of “what does it mean for consumers” and “what does it mean for AirNZ”. They will feed all their individual findings into that computer and “presto” the airlines will be off to court, Cullen, etc. to ask for another go while we continue to pay $200 to fly to Australia.

    ** ENDS **

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