Carriers will appeal against decision that their proposed plan is highly anti-competitive

Air New Zealand (ANZ) and Qantas were last week preparing to appeal to the Australian Competition Tribunal following rejection of their planned alliance by the Australian Competition and Consumer Commission (ACCC). The ACCC's decision resulted in ANZ and Qantas shares falling 12.7% and 4.5%, respectively, and warnings from analysts that a fare war across the Tasman would follow.

The ACCC reiterated its draft decision, saying that the proposed alliance, whereby Qantas would have taken a 22.5% share in ANZ, was not in the public interest and "highly anti-competitive". It rejects the carriers' claims of cost savings ensuing from the alliance and says that the national interest would be best served by continued competition between the two. The partners failed to appease the ACCC with undertakings proposed after April's draft decision, with the commission describing the undertakings as "heavily qualified, difficult to enforce and requiring monitoring".

The alliance was particularly seen as anti-competitive on trans-Tasman services. Although Emirates has entered the market and Virgin Blue Airlines is planning to launch services, the ACCC says that ANZ and Qantas will dominate the market for some time.

The door has not been fully closed however: "The ACCC appreciates that the aviation industry and markets such as the trans-Tasman are dynamic and subject to change," says recently appointed chairman Graeme Samuel, adding that if such change occurs "it could lead to the ACCC at another time reaching a different conclusion".

Qantas chief executive Geoff Dixon criticised the ACCC for taking a narrow view of competition and ignoring challenges facing airlines. ANZ managing director and chief executive Ralph Norris says the next step is to apply for a review of the decision by the Australian Competition Tribunal - which has the authority to grant or revoke ACCC decisions. The New Zealand Commerce Commission is expected to announce its final decision later this month and Norris is hopeful that it will view the alliance more favourably.

Source: Flight International