Facing losses on trans-Tasman routes between Australia and New Zealand, Qantas and Air New Zealand (ANZ) have revived talks about a codeshare.

The carriers have sought ways to co-operate ever since antitrust authorities rejected their proposed equity alliance two years ago. Yields across the Tasman, described by ANZ as “a bloodbath”, have plunged due to fifth-freedom carriers such as Emirates and Thai Airways and low-cost rival Pacific Blue.

The original alliance deal is dead, ANZ concedes, but it is talking to Qantas about a codeshare instead. Chief executive Ralph Norris predicted before he left ANZ recently that these talks could soon come to “a decision point”.

Both airlines were emboldened last year by an appeal that reversed the negative decision by Australia’s Competition and Consumer Commission (ACCC). The tribunal on appeal found that Tasman airline rivalry had intensified since the ACCC’s ruling, and justified a more lenient response to a Qantas-ANZ alliance. But the two airlines had no success overturning the New Zealand commerce commission, which called their proposed alliance anticompetitive.

It is uncertain how regulators would view a codeshare. A deal limited to the Tasman would be more narrow in scope than the comprehensive accord Qantas and ANZ originally proposed, while the Tasman is more competitive than when they first sought antitrust approval.

But that is changing. The fifth-freedom carriers that intensified com­petition so much are scaling back Tasman flights. Emirates has dropped Melbourne-Christchurch and Thai has pulled out of Brisbane-Auckland. Moreover, even on the routes they still fly, they and Pacific Blue draw leisure traffic, while Qantas and ANZ dominate the business sector. Any analysis that recognises these different markets could hinder a Qantas-ANZ codeshare.

Source: Airline Business