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The Right Talk: Why Airline Competition Matters

The Right Talk
From the Office of Bill English - 13th December

Why Airline Competition Matters

Why is National leading the argument over the proposed Qantas/Air New Zealand deal? Airline competition matters because the winners are New Zealanders. It is in the national interest to back what is good for the travelling public, exporters and our vital tourism industry.

But the Qantas deal is worse than anyone predicted. The public are the losers because it creates a virtual monopoly, which will dominate all trans-Tasman and domestic air travel sealing an end to healthy competition.

Not only that, the monopoly control will rest in the hands of a joint group comprising three Air New Zealand members and three Qantas members. This means that Qantas will have joint decision-making power, even though it will own much less than 50% of the airline.

This group will make all major decisions on fares, scheduling and routes for Air New Zealand's domestic and global operations as well as Qantas's trans-Tasman and New Zealand operations.

For New Zealanders, there will be no competition to drive down prices or encourage better services.

Unless the Government is persuaded otherwise, it will give the deal a conditional go-ahead on December 18, if it passes so-called national interest tests. If this happens, Qantas will acquire just under 5% of Air New Zealand, then a further 10% if it gains Commerce Commission approval with an option to gain up to 22.5%.

Air New Zealand needs a strategic partnership to retain its place as one of New Zealand's icon companies and it deserves to be congratulated for the turn-around of the last 12 months. But we can't afford to throw that away when other opportunities may present themselves, which retain competition and offer value for shareholders as well as reduced risks to taxpayers.

The Week In Politics...

*Bill English met with Virgin Blue this week and believes the Government must move to ensure that the discount airline gets a foot in the door to the New Zealand market. He wants to see the Government state its policy on competition in the airline market if it can't talk about the Qantas/Air New Zealand deal.

New Zealanders deserve to know whether the Labour Government supports competition or not.

*National MPs had good reason to feel they returned star performances in Parliament this week. A fired-up front bench facing an increasingly demoralised looking bunch on the government benches turned up the heat on leaky homes, the appointment of Joris de Bres, and his predecessor Gregory Fortuin, over whom the Prime Minister continues to have memory lapses.

*National is stunned that the Government is shrugging off suggestions of a formal Police investigation into the events leading up to the Auckland RSA murders.

William Duane Bell's name was given to police in connection with a burglary a week before the killings, and he had been released on parole five months before the triple murders.

"The families of all three victims and the sole survivor need to know the whole story. Not only do they deserve a proper explanation, but so, too, do the public of New Zealand," says Bill English.

"We need to be assured that people like Bell aren't slipping through the net."

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