TAANZ Opposes Code-Share Proposal

TAANZ Opposes Code-Share Proposal

The Travel Agents Association of New Zealand (TAANZ) today came out against any authorisation by the Minister of Transport to the Air New Zealand and Qantas Tasman Networks Agreement (TNA), known as the Code-Share proposal.

TAANZ says that the Minister does not have jurisdiction to authorise arrangements of the kind and nature put forward by the airlines and that Section 88 of the Civil Aviation Act was never intended to provide airlines with a protection from the anti-competitive provision of the Commerce Act. It also argues the TNA would, if approved, see an increase in the cost of trans-Tasman airfares and a dramatic reduction in competition

Paul Yeo, chief executive of TAANZ said, “Given the potential impact on consumers and the New Zealand economy, TAANZ’s preference is that the application be referred to the Commerce Commission. Determining the application under the provisions of the Commerce Act would enable proper weight to be given, by those expert in such matters, to all relevant factors and the public benefit.”

TAANZ’s position is set out in its submission to the Ministry of Transport lodged yesterday. It says that an inevitable consequence of the Minister approving the TNA would be that a significant number of New Zealanders would pay considerably more to travel to and from Australia.

The TNA would reduce capacity across the Tasman and, as a consequence, the cost of travel would increase as the number of seats is reduced and the airlines seek to maximise yield in a market where they would not have any real competition.

“Not only will fares within each category or price band rise but also the number of fares in the lower price bands will reduce markedly, particularly over peak periods,” Mr Yeo said.

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TAANZ is also concerned that approval of the TNA would significantly reduce competition on Tasman routes and may result in no effective competition on the Tasman.

“Qantas and Air New Zealand together account for around 80 per cent of passengers flying across the Tasman and, on a number of routes have no competition. If approved, the TNA will mean that there will be no competition on flights between Wellington-Sydney, Wellington-Melbourne, Auckland-Adelaide, Christchurch-Coolangatta, and all flights from Queenstown.

“We also don’t see any of the other airlines currently flying the Tasman being able to effectively compete with the TNA partnership because they don’t have the capacity, or for new airlines entering the market to provide effective competition.”

TAANZ formulated its position after studying the airlines’ proposal, reviewing submissions to the Australian Competition and Consumer Commission, and consulting its members.

Mr Yeo says, “The majority of members were against the proposal. The others raised some of the same concerns and while not supporting the TNA did not want to formally oppose it.

“The TNA proposal is of significant interest to our members, their customers and to the wider New Zealand economy. Having looked at the airlines’ proposal, we’ve concluded that the costs in terms of increased fares, a reduction in frequency and seat numbers are significant.

“The Minister would, should he grant approval to the TNA, need to be satisfied that there were other benefits that outweigh the obvious and undoubted public detriments. We have been unable to establish just what those benefits might be,” Mr Yeo said.

ENDS

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