Fyfe invokes nationalism in Air NZ-Virgin Blue trans-Tasman argument

Air NZ 747
Dark days ahead for Air NZ on the Tasman? Photograph: AirSpace photographer illuminati.

As I reported for our subscription newswire Air Transport Intelligence last week, Air NZ CEO Rob Fyfe accused Australian regulator the Australian Competition andConsumer Commission of being short-term focused in its rejection of the Air NZ-Virgin Blue trans-Tasman JV.

From our ATI coverage:

ANZ and Virgin Blue, the Tasman’s largest and third-largestcarriers, would have a combined 56% market share. The Qantas Group,comprising Qantas and subsidiary Jetstar Airways, would remain thesecond-largest airline group with a 32% market share, according to theACCC.

Fyfe argues ANZ and Virgin Blue need to create a proactivecounterbalance to the Qantas Group, who is closing in on market share.While Pacific Blue’s market share rose from 8% in 2006 to 16% lastyear, in the same period the Qantas Group fell from 34% to 32% and ANZfell from 46% to 40%. “This declining competitive position willcontinue in the void of Virgin Blue and Air New Zealand allowed toform this alliance,” Fyfe says.

In his address in Sydney to National Aviation Press Club, Fyfe also invoked a new argument: nationalism. Fyfe argued the ACCC was being ignorant of national imperatives, in a thinly veiled swipe at the Qantas Group and carriers operatingfifth-freedom flights on the Tasman. “The mega carriers are drivenpurely by business imperatives that don’t have to affect their ownnational interest,” Fyfe said.

Such carriers will force national carriers like ANZ to reduce theirnetworks, inhibit demand, and stagnate tourism, Fyfe said. “There isundoubtedly medium to long term national interest from allowing localcarriers to participate in consolidation.”

The question however is during the time of liberalisation and open skies, should countries protect their own carriers? Doesn’t any traffic promote tourism? How different is Qantas as a “national carrier” than Air NZ?

For now, the carriers and interested parties have been given an extension to 11October to respond to the draft decision and provide supplementaryinformation. Both ANZ and Virgin Blue say they will respond. A finaldecision is expected by the end of the year.

New Zealand’s Ministry of Transport is evaluating the alliance and hasyet to issue a judgment.

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