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Comments On ACCC Draft Codeshare Determination

Media Release

3 November 2006

Air New Zealand Comments On ACCC Draft Determination

Air New Zealand today said it was flabbergasted and astounded by the ACCC’s draft determination to turn down an application for a codeshare with Qantas on the Tasman.

Chief Financial Officer Rob McDonald says a preliminary review of the determination indicates several inconsistencies.

“Although we have only had a short amount of time to review the determination’s contents, we have already spotted flaws and we will be raising these with the ACCC before a final determination is made,” says Mr McDonald.

The proposed codeshare with Qantas is designed to remove excess capacity on the Tasman, while increasing frequency and maintaining everyday low fares.

“If the ACCC sticks with this determination – and let’s remember it has been proven to change its mind - it is potentially forcing Air New Zealand to make capacity and route decisions that will come at a significant cost to consumers. We cannot continue to fly the equivalent of 43 empty A320 aircraft across the Tasman daily. That’s 6300 empty seats every day.

“The poor performance of both Air New Zealand and Qantas on the Tasman has been well documented. The ACCC is misguided if it thinks airlines will keep pouring tens of millions of dollars into underperforming routes. Airlines are not a charity.”

Mr McDonald says Air New Zealand is committed to a strategy of growth, which will benefit consumers, tourism and trade.

“But it is only sensible to grow profitable routes. The ACCC’s decision, if it remains in this form in their final determination, seems to be designed to attempt to constrain Air New Zealand’s growth and tourism growth into New Zealand.

Mr McDonald says Air New Zealand finds it extremely disappointing that the ACCC has accepted the position put forward by monopolists such as Wellington International Airport and Infratil, which clearly are not committed to working with airlines to grow tourism and trade to the Wellington region.

Note: Air New Zealand will be making no further comment on the ACCC’s draft determination today.

ENDS

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