Air New Zealand/Qantas

Final Determination

23/10/2003 (2 documents)

Qantas - Air New Zealand Alliance Final Determination Executive Summary PDF (176 KB): 1. On 9 December 2002 the Commerce Commission (the Commission) received two interdependent applications for authorisation from Air New Zealand Ltd (Air NZ) and Qantas Airways Ltd (Qantas).

2. The first application by Qantas, made under section 67(1) of the Commerce Act, relates to a proposed "share purchase agreement" whereby Qantas would acquire 22.5% of the voting equity in Air NZ.

3. The second application by Air NZ and Qantas, made under section 58 of the Commerce Act, relates to the proposed implementation of a "strategic alliance arrangement" between Air NZ and Qantas. The strategic alliance arrangement would, among other things, require the two airlines to:
"¢ create a "Joint Airline Operation". Every Air NZ flight and those Qantas flights to, from, and within, New Zealand would make up the Joint Airline Operation. Its commercial activities would be managed by Air NZ, and which would be overseen by a strategic alliance advisory group comprising three representatives of each airline;
"¢ coordinate all aspects of the Joint Airline Operation including passenger fares and freight rates, flight schedules, the amount of passenger and freight capacity provided on each sector, code-sharing, marketing, frequent flyer programmes and profitsharing; and
"¢ cooperate in relation to other airline operations outside the scope of the Joint Airline Operation.
4. The contractual documents that give effect to the overall commercial arrangements are conditional upon the creation of the alliance under the strategic alliance arrangement. In this executive summary and in the Determinations, the share purchase agreement and the strategic alliance arrangement are collectively referred to as "the proposed Alliance".

5. In addition, Air NZ and Qantas have proposed that Qantas would have the right to be represented by two directors, which it would appoint to Air NZ's board of directors. In turn, Air NZ would have the right to be represented by one director, which it would appoint to Qantas's board of directors.
Qantas - Air New Zealand Alliance Final Determination PDF (2.4 MB): Qantas - Air New Zealand Alliance Final Determination

Commission Conference

25/08/2003 (51 documents)

Qantas-AirNZ Conference Agenda PDF (95 KB): Qantas-AirNZ Conference Agenda
Applications By Qantas Aiways Ltd and Air New Zealand Ltd Under Sections 58 and 67 of the Commerce Act 1986 For Authorisations of Strategic Alliance and Proposed Share Acquisition PDF (33 KB): Issues which should be addressed at the outset which are relevant to the determinations which the Commision if required to make. In addition, there will be outlined the evidence that has been present to the Commision, which was in the submission of the Applicants, meets the sattutory test and which dictates the granting of authorisations on both applications.
Infratiletal Conference Memorandum PDF (51 KB): This memorandum sets out broadly the topics to be covered. Of course, in
addition, we reserve the right to respond to any matters covered by the
Applicants in their submissions, and cross-submissions also raised at the
conference itself.
Virgin Blue - Conference Memorandum in Response to the Air New Zealand/Qantas Application PDF (29 KB): This memorandum is provided by Virgin Blue in response to the Commission's invitation to interested parties to file memoranda prior to the conference. The Commission requested that the memoranda set out the following:
a) An outline of further issues that have arisen since the cross-submissions that should be considered at the conference;
b) A statement of the key difference between its view and those of other parties
c) An identification of those areas that ought to be pursued by the Commission by way of further examination
Air New Zealand / Qantas Applications Conference Day 1, 18 August 2003 PDF (251 KB): Air New Zealand / Qantas Applications Conference Day 1, 18 August 2003
Air New Zealand / Qantas Applications Conference Day 1, 18 August 2003, 1.00 P.M. PDF (348 KB)
Conference Day 2, 19 August 2003 PDF (473 KB): Conference Day 2, 19 August 2003
Conference Day 3, 20 August 2003 PDF (688 KB): Conference Day 3, 20 August 2003
Conference Day 4, 21 August 2003 PDF (693 KB): Conference Day 4, 21 August 2003
Conference Day 5, 22 August 2003 PDF (652 KB): Conference Day 5, 22 August 2003
Conference Day 6, 25 August 2003 PDF (568 KB): Conference Day 6, 25 August 2003
Morrison & Co - Value Based Airlines PDF (865 KB): Morrison & Co - Value Based Airlines
Jerry Hausman - Economic Analysis of Proposed Alliance PDF (710 KB): Jerry Hausman - Economic Analysis of Proposed Alliance
The Emergence, Growth and Impact of Low Cost Carriers (LCCs) and Comments on the NZCC Factual and Counterfactual by Dr Michael Tretheway PDF (660 KB): The Emergence, Growth and Impact of Low Cost Carriers (LCCs) and Comments on the NZCC Factual and Counterfactual by Dr Michael Tretheway
The Qantas Counterfactual PDF (303 KB): The Qantas Counterfactual
Qantas Engineering and Maintenance PDF (60 KB): Qantas Engineering and Maintenance
Air New Zealand / Qantas - VBA Constraint PDF (368 KB): VBA categorises airlines that:

- Focus on point to point short haul operations
- Start from a very low "greenfields" cost base
- Have a simple fleet, low distribution costs, flexible employmentconditions, low on board product costs, no (or very limited) arrangements with other carriers
- Have high asset utilisation
Winston & Morrison - A Conceptual & Empirical Assessment - The Qantas Air New Zealand Alliance Presentation PDF (173 KB): Winston & Morrison - A Conceptual & Empirical Assessment - The Qantas Air New Zealand Alliance
Air New Zealand / Qantas - Travel Distribution Market PDF (202 KB): 1. Does access to Travel Distributors constitute a barrier to entry / expansion in relevant passenger markets?

2. What is the impact of the Alliance on the Travel Distribution Market?
Effects of Fifth Freedom Carriers on Tasman Competition PDF (163 KB): Effects of Fifth Freedom Carriers on Tasman Competition
Competitive Effects in Freight Market PDF (214 KB): NECG and the Commission have widely differing views as to likelycompetitive effects of Alliance on freight markets
Air NZ Holidays - Tourism Presentation PDF (317 KB): Air NZ Holidays - Tourism Presentation
Increasing New Zealand Tourism: Qantas Holidays Presentation PDF (2.4 MB): "¢To demonstrate the tourism benefits the Alliance brings to NZ
"¢To show how will Qantas Holidays ("QH") and Air NZ Holidays will deliver these benefits
NECG - Tourism Promotional Effectiveness PDF (173 KB): Changes in promotional effectiveness and expenditure will lead to an increase in tourist arrivals.
NECG - Welfare Benefits of Tourism Expansion PDF (282 KB): Multipliers derived from a general equilibrium model were used to estimate the welfare gains to New Zealand associated with the projected expansion in tourism.
Consumer Benefits From Improved Scheduling and New Online Flight Options - Robert D. Willig and Margaret E. Guerin-Calvert PDF (212 KB): - The NZCC has estimated the following benefits from improved scheduling and new flight options:
- Improved Scheduling: $360,000 per year
- New Online Flight Options:None
- New Non-Stop Flight Options:None

- In total, the NZCC finds that the benefits of the proposed alliance are between $33.5 million to $49.6 million per year

- This estimate understates the consumer benefits from improved scheduling and new flight options
Robert Willig - Modelling Issues - Air New Zealand / Qantas Application PDF (155 KB): Modelling issues with the Air New Zealand / Qantas Application by Robert Willig
Impacts of Allocative Efficiency Models PDF (351 KB): There are two models available to the Commission, which estimate the allocative efficiency impacts associated with the Alliance
NECG Response to Issues Raised by Zhang PDF (223 KB): NECG Response to Issues Raised by Zhang
NECG - Productive and Dynamic Efficiency PDF (217 KB): The Commission believes there would be major productive and dynamic efficiency losses as a result of the Alliance
-Productive efficiency loss: $95m
-Dynamic efficiency loss: $90m
NECG - Air New Zealand / Qantas Alliance Costsavings PDF (187 KB): NECG estimates NZ$383m in cost savings over 5 years from the Alliance
"¢ Cost savings claimed are similar to those claimed in any other merger
"¢ Commission's calculations are incorrect on account of the following:

- Starting value for NECG cost savings is in AUD and a discounted value

- View as to relevant counterfactual

- Assumption that cost savings are driven by passengers
NECG - Balancing Report PDF (98 KB): NECG - Balancing estimations
Economists Response - Qantas - Air New Zealand Alliance PDF (253 KB): Context for the economic analysis

- The proposed Alliance presents the prospect for benefits due to the consolidation and optimization of the two airlines'networks

- Economic analysis provides framework to address the question before the Commission --whether, with this change in the competitive landscape, the proposed Alliance is likely to produce substantial net benefits
NECG Response to Presentations Made at Hearings - Public Version PDF (178 KB): This note addresses the substantive issues raised during the course of the Commission's Conference in relation to the proposed Alliance. These relate to the evaluation of the Factual and Counterfactual, the NECG model and allocative, productive and dynamic efficiency, and the assessment of benefits. We close by highlighting aspects of Professor Hausman's analysis that we believe to be erroneous.
Opening Remarks by Geoff Dixon Ceo Qantas Airways Ltd NZCC Hearing, Wellington, 18 August 2003 PDF (95 KB): THANK YOU MADAM CHAIR AND COMMISSIONERS.
AS YOU MAY BE AWARE, WE HAVE A MAJOR BOARD MEETING AND OUR ANNUAL RESULTS ANNOUNCEMENT THIS WEEK AND THIS COMMITMENT PREVENTS ME FROM APPEARING BEFORE YOU IN PERSON.

I NEVERTHELESS WELCOME THIS OPPORTUNITY TO FOLLOW RALPH IN
OFFERING SOME INTRODUCTORY REMARKS IN SUPPORT OF THE
APPLICATION BY QANTAS AND AIR NEW ZEALAND - AN APPLICATION THAT I BELIEVE IS VITAL FOR THE FUTURE OF BOTH AIRLINES. WHEN I AM FINISHED, I WILL BE PLEASED TO RESPOND TO QUESTIONS.

WHAT I WOULD LIKE TO DO IN THE TIME AVAILABLE IS TO RESTATE THE FACTORS THAT LED QANTAS TO PURSUE AN ALLIANCE WITH AIR NEW ZEALAND IN THE FIRST PLACE, AND TO OUTLINE WHY IT REMAINS OF SUCH IMPORTANCE TO US.
John Palmer, Air New Zealand - Closing Statement PDF (132 KB): John Palmer, Air New Zealand - Closing Statement
Ralph Norris Statment on Air NZ-Qantas Application PDF (176 KB): Ralph Norris Statment on Air NZ-Qantas Application
Qantas Airways Limited And Air New Zealand Limited - Supplementary Submissions On Process Issues PDF (74 KB): This supplementary submission is filed at the request of the Commission and in respect to a point regarding the "onus" of proof which was raised during questioning by the Commission on 19 August 2003. It also deals with another issue raised, namely whether the Applicants would be "associated persons" following termination of the Strategic Alliance Agreement ("SAA").
Chapman Tripp Comment on Conditions For Proposed Qantas / Air New Zealand Alliance PDF (127 KB): Chapman Tripp Comment on Conditions For Proposed Qantas / Air New Zealand Alliance
Chapman Tripp Concerns with the Legal Form of the Applications PDF (54 KB): Chapman Tripp Concerns with the Legal Form of the Applications
Chapman Tripp Concerns with the Manner of which Applications have Been Handled PDF (64 KB): Chapman Tripp Concerns with the Manner of which Applications have Been Handled
Air New Zealand - Qantas Alliance Proposals Presentation to the New Zealand Commerce Commission, 22 August 2003 by Dr. David Stone PDF (77 KB): The Applicants claim that their proposals would result in net benefits compared with the alternative scenario without the alliance - that is, the counterfactual under which Air NZ would face a capacity battle with Qantas. This is the "war of attrition", the airlines' phrase that has gained widespread currency over the past year, a war Air NZ could not win. Instead, the airline would suffer a more or less gradual decline, which could ultimately lead to its demise. There have been varying estimates of how long this downward spiral would take` but the latest pointer was provided earlier this week by Air NZ's CEO, Ralph Norris, who suggested "three to five or six years". But, however soon, the applicants have stuck by their doomsday prediction. In my view their counterfactual is flawed. I will put forward four basic reasons for this view.
The Counterfactuals - A Presentation to the New Zealand Commerce Commission by Dr. David Stone PDF (57 KB): The Counterfactuals - A Presentation to the New Zealand Commerce Commission by Dr. David Stone
Qantas / Air New Zealand Proposed Alliance - Presentation by Gullivers Pacific PDF (315 KB): Qantas / Air New Zealand Proposed Alliance - Presentation by Gullivers Pacific
Presentation to NZ Commerce Commission on the proposed merger of Air New Zealand and Qantas Operations PDF (126 KB): Presentation to NZ Commerce Commission on the proposed merger of Air New Zealand and Qantas Operations
BonVoyage Presentation Slides PDF (328 KB): BonVoyage Presentation Slides
Bon Voyage Corrected Slide 15 PDF (88 KB): Bon Voyage Corrected Slide 15
Wellington International Airport Limited (WIAL) Presentation - Air New Zealand/Qantas Alliance PDF (342 KB): To clearly demonstrate the critical importance of competition for both market growth and the continuing introduction of new product and services
Invercargill Airport Presentation PDF (104 KB)
Invercargill Airport Slide Presentation Notes PDF (75 KB): Invercargill Airport Slide Presentation Notes
Jumpjet Presentation Address - Applications to the Commerce Commission By Qantas and Air New Zealand PDF (144 KB): Jumpjet Presentation Address

Cross Submissions

28/07/2003 (18 documents)

Tourism Holdings Limited - Support for Air New Zealand PDF (47 KB): We have met with Air New Zealand and discussed a range of issues including
the proposed Air New Zealand / Qantas Alliance and questions over Air New
Zealand operating routes if the Alliance does not proceed.

THL is committed to the support of Air New Zealand as a valued partner and
our recognition of the fact that clearly Air New Zealand has a major influence
in the fortunes of our visitor industry from our major markets.
Wellington International Airport Ltd - Cross-submission on Air New Zealand Submission regarding Air New Zealand/Qantas Strategic Alliance Draft Determination, 15 July 2003 PDF (258 KB)
CIAL - Cross Submission to Commerce Commission in Relation to Submissions by Applicants PDF (105 KB): This is the third submission filed by CIAL in relation to the applications by Qantas and Air New Zealand. The first was dated 14 February 2003. The second was dated 20 June 2003 and responded to the Commission's draft determination. This third submission is intended to respond to the submission by the Applicants responding to the draft determination.
Invercargill Airport, 18 July 2003 - Applications By Air New Zealand and Qantas PDF (59 KB): This is the third submission made by Invercargill Airport Limited on these matters and
reference is made to the first and second submissions dated 11 February and 19 June
2003, respectively.
Air New Zealand / Qantas authorisation Prepared by NZIER and Professor Tim Hazledine for Gullivers Pacific Group Microsoft Word Document (281 KB): This report responds to the 'Preliminary Response' dated 19 June 2003 by Air New Zealand and Qantas in renewed support of their application on 9 December 2002 to the New Zealand Commerce Commission (NZCC) and to the Australian Competition and Consumer Commission (ACCC) to be permitted to form a cartel to operate their airline services in and out of New Zealand.
Polynesian Airlines - Cross Submissions to Responses to Draft Determination regarding Air New Zealand and Qantas Stratgeic Alliance and for Qantas to Acquire Shares in Air New Zealand, 18 July 2003 PDF (199 KB)
Jumpjet Airlines Limited - Cross Submission on Air New Zealand / Qantas Draft Determination PDF (325 KB): In the closing overview comment JumpjetÂ® states that the composition of our submissions in this matter has been designed around practical analogy, the identification of industry strategies, legal based argument and implications, political effects of policy and the portrayal of predatory commercialism existing in the industry.

Serious involvement in the issues is prominent as a result of our development of Jumpjet Airlines LimitedÂ® with a distinct objective of gaining access to the market and in a non-predatory sense. The business model has been developed with the input of consultants from a significant number of non-industry and industry disciplines. We believe such a model is appropriate for the niche market sought and may contribute to the overall good of business development in general.

Our expectation is that the JumpjetÂ® contributions have added value to the New Zealand Commerce Commission and the Australian Competition and Consumer Commissions deliberations. That is, concerning the authorisation application by Qantas and Air New Zealand for Qantas to increase its equity shareholding to integrated (Merger) status under Section 58 of the Commerce Act.
Origin Pacific Cross Submissions PDF (172 KB): Origin Pacific has concentrated in its submissions on the New Zealand main trunk and provincial airline markets in which it is involved and in which it has experience and expertise. Its submissions have emphasised the anti-competitive effect that the Alliance will have on these markets and on Origin Pacific's ability to compete.
Air New Zealand & Qantas - Cross-Submission in Response to Third Party Submissions Regarding the Commerce Commission's Draft Determination PDF (123 KB): Third parties have provided very little in the way of supporting evidence for the statements and assertions made in their submissions. The Applicants believe the Commission must prefer the Applicant's submissions. The Applicants believe the Commission must prefer the Applicant's submissions, which are backed by substantial and detailed evidence, to the submissions of third parties that are largely unsupported by any objectively verifiable evidence.
Morrison & Winston - The Qantas-Air New Zealand Proposed Alliance: A Conceptual And Emprical Assessment PDF (228 KB): We have been asked by representatives for Qantas Airways Limited and Air New Zealand Limited to submit our views to the New Zealand Commerce Commission on the economic desirability of allowing Qantas and Air New Zealand to form an alliance. It is our understanding that an alliance in this context involves more than a so-called alliance in the United States, which primarily amounts to code-sharing and increased options to accrue frequent flier mileage, but falls somewhat short of what typically constitutes a merger in the U.S, where one company acquires and controls all the assets of another company.
Steven A. Morrison Curriculum Vitae PDF (52 KB): Steven A. Morrison Curriculum Vitae
Clifford Winston Curriculum Vitae PDF (116 KB): Clifford Winston Curriculum Vitae
Bon Voyage - Cross Submission on Commerce Act 1986 - Section 58 Application by Air New Zealand and Qantas Airways Ltd PDF (66 KB): This cross-submission makes comment directly on the applicants reply to the NZCC Draft Resolution.

We note that much of the applicants' current submission has been written or heavily influenced by overseas parties and we would ask that the NZCC carefully consider all of this overseas information for relevance to the applications.

We wish to make several comments beyond our two initial submissions relating particularly to Fifth Freedom Carriers, and VBA entry.
Save Air New Zealand - Cross Submission regarding Submissions of Air New Zealand and Qantas on Commission Draft Determination, 18 July 2003 PDF (85 KB)
Virgin Blue - Cross Submission on Application for Authorisation of Qantas/Air New Zealand/Air Pacific Proposed Alliance, 18 July 2003 PDF (32 KB)
Infratil, 22 July 2003 - Applications For Authorisation Made By Qantas Airways Limited and Air New Zealand Limited Cross-Submissions Microsoft Word Document (104 KB): As part of the process for determining the Applications, the Commission has called for cross-submissions from persons proposing to participate in the conference in respect of submissions already made by the Applicants on the Commission's draft determination dated 10 April 2003 (the "Draft Determination").
Michael Tretheway - Air New Zealand / Qantas Alliance PDF (677 KB): Michael Tretheway - Air New Zealand / Qantas Alliance
Willig & Guerin-Calvert - An Economic Analysis of the Consumer Benefits and Competitive Effects of the Proposed Alliance Between Qantas Airways and Air New Zealand PDF (355 KB): We have been asked by counsel for Qantas Airways and Air New Zealand
to build on Dr. Willig's previous report and assess the consumer benefits and competitive effects of the proposed alliance. In particular, in this report, we provide an evaluation of the potential consumer benefits of improved scheduling and new flight options that could result from the proposed alliance, and analyze the competitive effects of the proposed alliance by using the same type of qualitative, route-by-route analysis that antitrust authorities in the United States and European Union have used to evaluate other proposed
airline alliances and airline mergers.

Submissions on Draft Determination

23/06/2003 (25 documents)

Gerald Chambers, 19 May 2003 - Proposed Purchase of Air New Zealand Shares by Qantas PDF (163 KB): Gerald Chambers, 19 May 2003 - Proposed Purchase of Air New Zealand Shares by Qantas
Polynesian Airlines - Submission on Draft Determination Air NZ/Qantas PDF (279 KB): It is submitted that there are several important issues that are material to the
Commissions' treatment of the Applications that have not, so far, been drawn to their attention to enable appropriate weighing in the balance prior to the Draft
Determinations being formulated.
Simon Cave - Regarding the Merger Application of Qantas and Air New Zealand PDF (60 KB): Simon Cave - Regarding the Merger Application of Qantas and Air New Zealand
Jumpjet Draft Determination Response - Proposed Qantas and Air New Zealand Merger PDF (170 KB): In response to the Commerce Commission Conference Procedures and in relation to the Draft Determinations handed down by the Commerce Commission and the Australian Competition and Consumer Commission {Commissions}, plus subsequent critical issue questions, Jumpjet Airlines LimitedÂ® accepts the Draft Determination analogies and the decisions handed down.
Jumpjet Appendix 1 PDF (64 KB): Jumpjet Appendix 1
Jumpjet Appendix 2 PDF (11 KB): Jumpjet Appendix 2
Jumpjet Appendix 3 PDF (20 KB): Jumpjet Appendix 3
Mayor of Dunedin - Submission to the Comemrce Commission - Air New Zealand - Qantas Alliance PDF (254 KB): The Commerce Commission issued a draft determination on the proposed alliance between Air New Zealand and Qantas, on 10 April 2003, that reached the preliminary view that it could not be satisfied that the public benefits of the proposed arrangement were likely to outweigh the competitive detriments. In response to the Commission seeking further submissions from interested parties, the Dunedin City Council has prepared this submission. Of the 66 questions for further discussion raised by the Commerce Commission in the draft determination, there are 12 that relate to the concerns of the Dunedin City Council. These questions fall into three areas:

1. The impact of the proposed alliance on competition within New Zealand and its impact on
airfares (both on the main trunk and provincial routes) - Questions 23, 27, 39, 57, 58, 65

2. The impact of the alliance on access to the Tasman market - Questions 28, 30, 65

3. The impact of the alliance on the freight market both in capacity and price - Questions 35, 36, 37, 60
Invercargill Airport, June 2003 - Submissions to the Commerce Commission PDF (310 KB): These submissions have been compiled against the background of the original Applications as well as the subsequent Draft Determinations of the Commission and its subsequent 66 requests for comment on matters arising there from dated 10 April 2003.
Commerce Act 1986 - Section 58 Application By Air New Zealand And Qantas Airways Ltd - Submitted By Bon Voyage Marketing Ltd (Second Submission) PDF (270 KB): This second submission builds on our preliminary submission and addresses:
"¢ The Draft determination and questions posed by the NZ Commerce Commission
"¢ Air New Zealand and Qantas undertakings announced 13 May 2003
"¢ Comment on marketplace developments since February 2003
CIAL - Cross Submission to Commerce Commission in Relation to Draft Determination PDF (95 KB): This submission is written in response to the draft determination issued by the Commission on 10 April 2003.
Consumers Institute - Submission in response to Commerce Commission's draft determination on application by Air NZ and Qantas PDF (72 KB): The Consumers' Institute supports the preliminary view reached by the Commission in its draft determination that the proposed alliance should not be authorised.
Doug Weir, 20 June 2003 - Further Submission on the Proposed Air New Zealand / Qantas Alliance PDF (56 KB): Doug Weir, 20 June 2003 - Further Submission on the proposed Air New Zealand / Qantas Alliance
Commerce Commission Draft Determination on Proposed Strategic Alliance Between Air New Zealand and Qantas Seeking Authorisation of Certain Restrictive Trade Practices and of a Proposed Business Acquisition PDF (385 KB): The parties to this submission support the Commerce Commission in their draft determination to decline the application for the proposed strategic alliance between Qantas Airways and Air New Zealand Limited.
Minister of Tourism - Air New Zealand/Qantas Strategic Alliance: Tourism Implications PDF (106 KB): The Strategic Alliance application between Air New Zealand and Qantas has now been lodged with the Commerce Commission. We have identified three areas where the application is expected to have consequences for tourism. These are:

"¢ Forecast international visitor arrivals over the next five years and the
anticipated airline capacity on key international routes. Tourism New Zealand
analysis of the proposal indicates that the main issue is undersuppy on the
Tasman if there are no new entrants into that market.

"¢ Potential Global Airline Alliance changes between Air New Zealand and
Qantas. Any changes to the current arrangements are likely to have
significant consequences for the flow of visitors to New Zealand.

"¢ Dual destination marketing implications. Based on past experience there is
likely to be little change in expenditure on dual destination marketing as a
result of the proposed alliance. In addition, the current approach of Tourism
New Zealand is to promote higher yield mono destination travellers to New
Zealand.
Gullivers Pacific OECD Airline Mergers PDF (1.7 MB): Gullivers Pacific OECD Airline Mergers
Hospitality Association of New Zealand, 20 June 2003 - Air New Zealand and Qantas Co-operation Agreement (85 KB): Thank you for the opportunity to further comment on the Commerce Commission's draft determination. The Association supports the Commission in its continued questioning of matters raised in the draft determination.
Infratiletal, 20 June 2003 - Submissions to the Commerce Commission Regarding Draft Determination on Applications Made By Qantas Airways Limited and Air New Zealand Limited PDF (320 KB): In the course of considering the applications of Qantas Airways Limited ("Qantas") and Air New Zealand Limited ("Air New Zealand") in respect of a proposed strategic alliance and a proposed merger, the Commission has published a draft determination dated 10 April 2003 (the "Draft Determination"). In the Draft Determination (at paragraph 31) the Commission sought submissions from interested parties in respect of the preliminary conclusions reached.
Origin Pacific, Submission on Draft Determination, Air NZ/Qantas PDF (72 KB): Origin Pacific supports the Draft Determinations. It believes (1) that the proposed Qantas/Air New Zealand alliance ("the Alliance") would result in a substantial lessening of competition and (2) that the detriments are in no way outweighed by the benefits claimed. In its view the Application should be declined.
Robin Halliday - Member Save Air NZ Working Group PDF (459 KB): As a member of the Save Air New Zealand Working group I support the initial findings of the Commerce Commission and its Australian equivalent. They were victory not only for commonsense but for an honest appraisal of the economic position of the Airlines and the relevance of the projections made.
Save Air New Zealand Submission by Dr Ian Prior ONZM - Applications of Air New Zealand Limited and Qantas Airways Limited 20 June 2003 PDF (1.6 MB): The Save Air New Zealand group wishes to congratulate the Commerce Commission on its draft report. We felt that it represented a victory for common sense and underlines the independence of the Commissioners, who obviously would have been aware of politicians expressing opinions on both sides of the Tasman.
TAANZ - Further Comments and General Statement Of Support For The Conclusions Reached And Views Expressed By The Commerce Commission In Its Draft Determination PDF (211 KB): TAANZ wishes to make additional comments to the New Zealand Commerce Commission on its Draft Determination and on the proposed Air New Zealand/Qantas Alliance.

TAANZ strongly supports the view adopted by, and the conclusions reached by, the New Zealand Commerce Commission in its Draft Determination. In this further submission it proposes to deal specifically with those questions posed by the Commerce Commission which bear directly on the area which TAANZ and its members have specific knowledge or expertise. In relation to other issues on which it does not make specific comment TAANZ supports the position adopted by the Commission in its Draft Determination.
Virgin Blue - Submission on Draft Determination on Qantas/Air New Zealand/Air Pacific Proposed Alliance PDF (626 KB): This submission responds to the New Zealand Commerce Commission's (Commission) draft determination dated 10 April 2003 (Draft Determination) in the matter of an application for authorization of a business acquisition and in the matter of an application for authorisation of certain restrictive business practices (together the Applications) involving Qantas Airways Limited (Qantas) and Air New Zealand Limited (Air New Zealand) (together the Applicants)
WIAL - Submission on Draft Determination on Applications by Air New Zealand / Qantas PDF (583 KB): Accordingly, WIAL considers that the Commission's Draft Determination, indicating that it is likely to decline the Applications, is appropriate.
New Zealand Paeony Society - The Draft Determination of the Commerce Commission on the matter of an application for authorization of an alliance involving Qantas Airways and Air New Zealand PDF (126 KB): The New Zealand Paeony Society supports the findings of the Commission in paras198"¦201 that there are significant differences between the cargo services offered by passenger airlines and cargo airlines such as significantly higher costs, less suitable routes and lack of frequency.

Submission by Applicant on Draft Determination

02/07/2003 (19 documents)

Air NZ/Qantas - Applicants Reponse - Commerce Commission's Preliminary Analysis and Methodology PDF (492 KB): On 10 April 2003 the New Zealand Commerce Commission (the Commission) issued a draft determination proposing to deny authorisation to Qantas Airways Limited (Qantas) and Air New Zealand Limited (Air New Zealand) in respect of the proposed acquisition of 22.5% of Air New Zealand's voting equity by Qantas, and the proposed Strategic Alliance Agreement (SAA) (together the Alliance) between Qantas and Air New Zealand (the Draft Determination).
Table of Contents - Chapters PDF (54 KB): Table of Contents - Chapters
Chapter 1 - Overview of the Applicants' Submission PDF (102 KB): Chapter1 - Overview of the Applicants' Submission
Chapter 2 - Structural Change in the Global Aviation Industry PDF (596 KB): This chapter describes the present crisis in the global airline industry and demonstrates why it is not short term in nature. It also shows why it is not reasonable to assume that either Australia or New Zealand is protected from the crisis. The purpose is to ensure that the Commission has the necessary information on the changed structure of the industry, and the resulting changes in its conduct and performance. Without this information about the behaviour of suppliers and customers in the airline industry, there is a risk that the Commission will misapply competition law and policy, including by
applying "old learning" that was relevant before the underlying structure, conduct and performance of the industry changed.
Chapter 3 - VBA Entry PDF (266 KB): This Chapter provides an assessment of:

Â· the likelihood of timely, constraining VBA entry on domestic New Zealand and
Tasman routes; and
Â· the market impacts of VBA entry.
Chapter 4 - Fifth Freedom Competition PDF (197 KB): The Applicants have previously submitted that fifth-freedom carriers do impose, and will continue to impose, a significant competitive constraint
on the Applicants in the Tasman market because:

"¢ fifth-freedom carriers already account for approximately 25% of total capacity on the Auckland-Sydney route and 44% of total capacity on the Auckland-Brisbane route;
"¢ fifth-freedom services are usually provided at low fares recognising their ability to take advantage of marginal pricing since there is minimal opportunity cost in terms of the use of the aircraft (it would otherwise sit on the ground in Australia); and
"¢ there are numerous carriers with fifth-freedom rights and, accordingly, the ability to expand on to the Tasman.
Chapter 5 - The Counterfactual PDF (234 KB): In its Draft Determination on the proposed Alliance between Qantas and Air New Zealand, the Commerce Commission ("Commission") discounted Qantas' view of its likely future if the Alliance were not to proceed. Qantas' view of its future in the absence of the Alliance with Air New Zealand remains unchanged. This document sets out further material for the Commission's consideration, which addresses each of the arguments made in the Draft Determination, demonstrating why Qantas' Counterfactual is the most likely future outcome if authorisation is not granted.
Chapter 6 - Confidential Air New Zealand Counterfactual Submission PDF (122 KB): This Chapter contains:

"¢ Air New Zealand's confidential submissions on the likely financial implications for Air New Zealand of the Applicants' Counterfactual as described in the original Applications (and which is addressed separately in detail in chapter 5); and

"¢ Submissions on the welfare implications, including the implications for tourism in New Zealand.
Chapter 7 - Market Definition and Competitive Effects PDF (250 KB): Chapter 7 - Market Definition and Competitive Effects
Chapter 8 - Allocative Efficiency Detriments PDF (940 KB): In its draft determination, and more recently in its "audited calculations", the allocative efficiency results presented by the Commission rely entirely on an analysis undertaken by Professor Gillen ("Gillen"), the Commission's economic expert. To date, NECG has been provided with three versions of Gillen's analysis, the most recent on 11 June 2003. We have reviewed each of these analyses and have serious concerns with the approach adopted.
Chapter 9 - Productive and Dynamic Efficiency Detriments PDF (645 KB): The Commission says that major productive and dynamic efficiency losses will result from the Alliance. It is submitted that:

. The Commission's approach to estimating these detriments is analytically
incorrect, is inconsistent with the literature and ignores key features of the
situation;

. The method used to quantify expected detriments involves substantial double
and treble counting, and results in estimates that are implausible on their face;

. Properly evaluated, the Alliance will result in gains in productive and dynamic
efficiency.
NECG - Revised Quantification PDF (89 KB): NECG - Revised qunatification of the benefits associated with the alliance
Chapter 11 - Tourism Benefits PDF (344 KB): Chapter 11 - Tourism Benefits
Chapter 12 - Responses to NZCC Draft Determination On matters concerning air freight markets PDF (79 KB): Chapter 12 - Responses to NZCC Draft Determination On matters concerning air freight markets
Chapter 13.- Engineering and Maintenance Benefits PDF (33 KB): Chapter 13.- Engineering and Maintenance Benefits
Chapter 14 - Conditions Offered to the Commission by the Applicants PDF (132 KB): Chapter 14 - Conditions Offered to the Commission by the Applicants
Appendix I - Response to Commerce Commision's Questions PDF (110 KB): Appendix I - Response to Commerce Commision's Questions
Appendix II - Glossary PDF (217 KB): Appendix II - Glossary
Appendix III - Tourism Related Welfare Impacts of the Confidential Counterfactual PDF (234 KB): The Confidential Counterfactual (CC) is concerned with the medium-term outllook for Air New Zealand in an uncertain environment in which the Allicance has been blocked by competitiion authorities. The airline industry has been very volatile in recent years with passenger numbers being impacted significantly by exogenous shocks such as wars, ffinancial crises and most recently, contagious diseases. The variabiliy in visitor arrivals to New Zealand has grown considerably in recent years, wuth strong surges in growth at least partially offset by downturns attributable to major world events.

Draft Determinations

10/04/2003 (3 documents)

Executive Summary of Commission Draft Determination - Application by Air New Zealand / Qantas PDF (134 KB): Executive Summary of Commission Draft Determination - Application by Air New Zealand / Qantas
Commission Draft Determinations on Applications by Air New Zealand and Qantas PDF (1.1 MB): The two applications are interrelated in that the Applicants state that neither would proceed without the other. Together they may be referred to as the "proposed Alliance". In these circumstances, the Commission, in exercising its discretion, is of the view that it is appropriate to analyse the combined impact of the two applications.
Commerce Commission Change To Draft Determinations Resulting From Modelling Calculation Audit - Qantas Airways Limited and Air New Zealand Limited Executive Summary PDF (193 KB): Commerce Commission Change To Draft Determinations Resulting From Modelling Calculation Audit - Qantas Airways Limited and Air New Zealand Limited Executive Summary

Initial Submissions

30/04/2003 (86 documents)

Norm Geary, 9 December 2002 - Qantas/Air NZ Application PDF (969 KB): As a former Chief Executive of Air New Zealand (1982-1989) and an individual who was deeply involved in the tourism industry between 1982 and 1997 (principally through my roles as CEO if Air New Zealand Tourism Board) I am of the clear view that the arrangements as proposed are unnecessary and against the long term interests of Air New Zealand, the tourism industry, the travelling public and the national interest.
Rod Fabish, 11 December 2002 - Qantas - Air New Zealand Alliance PDF (70 KB): Rod Fabish, 11 December 2002 - Qantas - Air New Zealand Alliance
Peter Graham, 22 December 2003 - Submission on the proposal for Qantas to take a significant shareholding in Air New Zealand PDF (69 KB): Peter Graham, 22 December 2003 - Submission on the proposal for Qantas to take a significant shareholding in Air New Zealand
Importers Institute of New Zealand, 23 December 2002 - Submission on the Air New Zealand / Qantas authorisation application PDF (55 KB): The Importers Institute is opposed to the proposed transaction. We believe that it would have the effect of reducing capacity and increasing freight rates. It would entrench Qantas and Air New Zealand into a dominant position in the New Zealand domestic and trans-Tasman aviation markets, to an extent that would deter future competitors from entering those markets.
Maurice McGreal, 9 January 2003 - Reference: Air New Zealand / Qantas matter PDF (85 KB): Air Transport has become irreplaceable in today's worldwide commerce
because of its ability to span the Globe within 24 hours. This aspect from
the very earliest days was the over-riding advantage that attracted politicians and passengers and traders to support it. Very early on however, Winston Churchill became aware of the horrendous costs that lay behind this new system of transportation. In 1919 he warned Westminster of this saying,
" Aviation must fly by itself; Government cannot possibly hold it up in the
air."
Lascelles - Air New Zealand / Qantas Enqiury PDF (1.2 MB): I have been a cartographic and travel publisher in London for 35 years. We publish the guide books that encourage travel and help make the profits for the airlines. We can often detect trends years before they emerge. We watch. I should like to submit some observations which may be helpful to the Commissioners.
Alan Burlton - Concern Over Proposed Merger Between Qantas - Air New Zealand. PDF (294 KB): Letter from Alan Burlton expressig concern over the proposed merger between Qantas anad AirNZ.
Australasian Business Travel Association - Proposed Qantas Airways 22.5% stake holding of Air New Zealand PDF (91 KB): Letter discussing ABTA's role and decision to obtain 22.5% share of Air New Zealand
Ewan Wilson, 28 January 2003 - Qantas - Air New Zealand Alliance PDF (108 KB): As founder and former Chief Executive of Kiwi International Airlines Lmited, this letter may surprise you but I support the Qantas' bid to buy 22.5% of Air NZ as long as the effects of duopoly are mitigated.
Simon Gunson, 30 January 2003 - Qantas / Air New Zealanad Merger PDF (427 KB): I am actively preparing to create a trans-Tasman airline to resolve the desperate need of South Island and Wellington exporters for more airfreight capacity. I noticed comments reported in newspapers, that these two airlines have pledged to provide sufficient terminal access to new entrants. As an interested party, the Commission might value my input.
AFCQ submission regarding Qantas and ANZ application under the Trade Practices 1971. PDF (303 KB): AFCQ submission regarding Qantas and ANZ application under the Trade Practices 1971.
Confidential - Submission on Proposed Air New Zealand & Qantas Alliance.pdf PDF (93 KB): I do not have definitive comment to pass on the proposed alliance as the issues are so complex and the competing issues so difficult to balance, as to make a clear statement for or against problematic. I simply can say I am concerned about the anti competitive nature of the deal - anti competitive elements that may have a profound impact on the tourism industry.
Harvey Bell, 4 February 2003 - Submission on the Air New Zealand - Qantas Application to Implement a Strategic Alliance Arrangement PDF (151 KB): As a user of domestic air services from a regional airport, I am opposed to the proposed Alliance between Air New Zealand and Qantas because of its inevitable impact on the cost of flying. An improved quality of service and lower airfares were the consequences of competition in the past and I would not like to see these gains eroded.

Having worked as a consultant to Europe's then largest charter airline in the 1980s (developing budgets, new aircraft cost/benefit evaluations and implementing an improved management information system), I have a good understanding of airline economics and the need to balance the multitude of factors required to have a viable business. This submission is therefore made with the benefit of understanding the issues.
Tourism Industry Association - New Zealand's airline industry: â€œPolicy and Preferencesâ€ PDF (1.3 MB): Tourism Industry Association - New Zealand's airline industry: "Policy and Preferences"
Chris King - Qantas / Air New Zealand PDF (260 KB): Chris King - Qantas / Air New Zealand
Sydney Airport - Qantas and Air New Zealand Proposed Alliance PDF (76 KB): Thank you for the opportunity to provide a submission to the ACCC's assessment of the proposed alliance between Qantas and Air New Zealand.
Jarod Holter, 8 February2003 - Possible Merger Between Air New Zealand and Qantas Airways PDF (86 KB): In recent times, I have had the pleasure of travelling with both airline companies. In my opinion, I feel that customer service and support and value for money have been the pivotal reason I have flown with Air New Zealand.
Jared Ball, 9 February 2003 - Re: Submission against the Strategic Alliance between Qantas and Air New Zealand PDF (56 KB): I am a proud New Zealander who is now living in Los Angeles and is very concerned that this Strategic Alliance will be the beginning of the end for Air New Zealand. I am making a submission in my capacity as a member of the United Airlines Mileage Plus frequent flyer program and consequently as a member of the Star Alliance frequent flyer program. I have grave concerns about the proposed alliance with Qantas and I would now like to explain these to you.
Jumpjet - Cover Page Microsoft Word Document (34 KB): Jumpjet - Cover Page
Jumpjet - Contents Page Microsoft Word Document (31 KB): Jumpjet - Contents Page
Jumpjet Submission - Qantas - Air New Zealand Merger Microsoft Word Document (131 KB): Jumpjet Airlines LimitedÂ® recognises the consequences of decision making by the Commerce Commission and the Australian Competition and Consumer Commission in response to the proposed integrated merger via equity shareholding between Qantas Airlines and Air New Zealand. The following is aimed at providing information and analogy in relation to the alliance strategies in motion by major players in the Australasian aviation industry.
Jumpjet Flow Chart - Market Lockup Microsoft Word Document (25 KB): Jumpjet Flow Chart - Market Lockup
Jumpjet - Marketing Alliances - Trans Tasman Microsoft Word Document (32 KB): Jumpjet - Marketing Alliances - Trans Tasman
Jumpjet - Table 1: International Alliances - Trans Tasman.doc Microsoft Word Document (41 KB): Jumpjet - Table 1: International Alliances - Trans Tasman.doc
Jumpjet - Table 2: Marketing Alliances & Fifth Freedom- Trans Tasman Microsoft Word Document (28 KB): Jumpjet - Table 2: Marketing Alliances & Fifth Freedom- Trans Tasman
Confidentiality Claim PDF (86 KB): Confidentiality claim on the various aspects of the Qantas / Air NZ alliance
Peter Read - Commerce Act 1986 - Section 58 Application By Air New Zealand Limited And Qantas Airways Limited PDF (60 KB): I am a consultant in the field of climate change strategy and related matters, which work involves me in attending meetings and conferences overseas. In recent years this has taken me round the world, or to Europe and back usually via the USA, about five times annually. Travel costs have represented about [] per cent of my small firm's turnover. In these circumstances, the maintenance of effective competition in the cross-Pacific route is of very great concern to me. I do not believe this can happen under the proposed strategic alliance, particularly now that United Airlines are dropping this route.
Katalina Levao, 11 February 2003 - Save Air New Zealand PDF (59 KB): I wish to register opposition to the proposed alliance between Air New Zealand and Qantas. It is not in the best interests of New Zealanders for the following reasons:

"¢ Economic Impact
"¢ National Interest
"¢ Personal interest
Virgin Blue - Submission on Proposed Air New Zealand/Qantas Alliance PDF (638 KB): Virgin Blue has been actively considering establishing operations on these routes. With or without the Proposed Alliance, Virgin Blue will commence on these routes. Critically the timing and scale of Virgin Blue's entry will depend on the barriers to entry.
Frontier Economics - Critique of the NECG Report on the Qantas Air New Zealand Alliance PDF (481 KB): Frontier Economics has been asked by Gilbert & Tobin for its opinion of the NECG Report that Qantas and Air New Zealand (ANZ) rely on in their applications ('the Applications') for authorisation before the Australian Competition and Consumer Commission (ACCC) and the New Zealand Commerce Commission (NZCC) of their proposed coordination and integration of services ('the proposed alliance'). This report is that opinion.
Virgin Blue - Notes On Yield Management PDF (133 KB): A yield management system (sometimes known as a revenue management system) is a system designed to maximise seat sales at the optimal price to maximise revenue per flight.
Bruce Tulloch - Air New Zealand and Qantas Alliance PDF (142 KB): Submission on Air New Zealand and Qantas Alliance - Bruce Tulloch
Cory-Wright, 12 February 2003 - Future Composition of Air New Zealand's Board PDF (163 KB): Cory-Wright, 12 February 2003 - Future Composition of Air New Zealand's Board
McDouall, 12 February 2003 - Submission on the Proposed Qantas / Air New Zealand Strategic Alliance PDF (77 KB): I wish to request the opportunity to present to the Commerce Commission in repect to following concerns which I hold in respect the abovementioned Strategic Alliance, namely:

1. The impact on competition levels between Wellington and Australia;
2. The impact on domestic competition levels;
3. The future availability of seats for the use of Frequent Flyer / Airpoints
Margaret Hicks, 12 February 2003 - Margaret Hicks - Strategic Alliance Between Air NZ and Qantas PDF (435 KB): Margaret Hicks, 12 February 2003 - Margaret Hicks - Strategic Alliance Between Air NZ and Qantas
David Peart, 13 February2003 - Submission to the Commerce Commission on the proposed Qantas shareholding in Air New Zealand PDF (116 KB): David Peart, 13 February2003 - Submission to the Commerce Commission on the proposed Qantas shareholding in Air New Zealand
NZEGO - Proposed Shareholding by Qantas in Air New Zealand PDF (55 KB): As our name suggests, we represent commercial orchid growers. We are the only such organisation in New Zealand, and our members account for some 70 to 80% of the total annual production of orchids.
Alex Gray - Objection to Qantas - Air New Zealand Alliance PDF (54 KB): Letter from Alex Gray expressing concern over the proposed Qantas - Air New Zealand Alliance.
Palmerston North Airport - Authorisation Of Proposed Arrangement And Acquisition Of Equity - Air New Zealand And Qantas PDF (96 KB): The application by Air New Zealand and Qantas is relevant to Palmerston North Airport Ltd because Palmerston North International Airport is a key regional airport in the New Zealand domestic airport network, and it services international sectors that at present are trans-Tasman services only.
Consumers Institute - Submission in response to application by Air NZ and Qantas for authorisation of proposed arrangement PDF (176 KB): Consumers' Institute is a broad-based national consumer organisation. On behalf of our 100,000 members we test products, compare the quality of services, research and comment on current consumer issues and expose exploitation of consumers by unscrupulous traders.

Our prime purpose is to inform and protect the interests of our membership. However, our work also has a benefit to all New Zealand consumers. This is particularly so when we take up an issue of broad public interest. The arrangement proposed by Air NZ and Qantas is such an issue.

We believe the Commission should refuse to grant the application.
House of Travel, 13 February 2003 - Air New Zealand / Qantas proposed transactions PDF (140 KB): House of Travel is an independent, owner-operated travel organisation. House of Travel began operations in Christchurch in 1987 and now consists of 83 travel agencies throughout New Zealand. Each House of Travel travel agency is formed as a partnership, with its owner operator and House of Travel Holdings Limited each having a half share in the business. The group's turnover now exceeds $500 million per annum.
John Kershaw, 13 February 2003 - Submission on the Propsed Air New Zealand and Qantas Alliance PDF (157 KB): This submission is to oppose the proposed alliance between Air New Zealand and Qantas. I believe and alliance between these 2 carriers is both anti-competitive and not in the national interest.
Doug Weir, 13 February 2003 - Submission on the Proposed Air New Zealand / Qantas Alliance PDF (72 KB): Doug Weir, 13 February 2003 - Proposed Air New Zealand / Qantas Alliance
Polyglase - Submission of Sale of Air New Zealand Shares to Qantas PDF (74 KB): Polyglase - Submission of Sale of Air New Zealand Shares to Qantas
Major Accommodation Providers (MAP), 14 February 2003 - Submission on the Proposed Strategic Alliance Between Air New Zealand and Qantas Airways PDF (361 KB): In past years, Air New Zealand had a mixed reputation, particularly domestically. Many travelers had justifiable complaints with the airline's services, cost of dares, timeliness, catering and perceived "arrogant" delivery. However, with the entry of Ansett with new lounges, air bridges and cheerful service, overall performance improved markedly. Freedom Air was established which increased trans-Tasman capacity at significantly reduced fare and service levels.
Laurenson, 14 February 2003 - Qantas - Air New Zealand Merger PDF (62 KB): We have a multi facet business. My wife and I grow olives and peonies in
Blenheim. In addition we still retain business links - my wife with the
museum world as a consultant and myself as a consultant to clients in the
finance sector.
Dunedin City Council, 14 February 2003 - Qantas / Air New Zealand Alliance PDF (53 KB): Dear Ms Whiteside
I wish to take the opportunity to express Dunedin City Council's
reservations regarding the proposed alliance between Air New Zealand and
Qantas. Efficient and competitively priced air links are vital to Dunedin
and Otago's economy and the Dunedin City Council is concerned that the
proposed alliance may impact adversely on these links. Our concerns are
outlined below.
Technix Group, Submission on Air NZ/Qantas PDF (74 KB): John Matthews Submission - Air New Zealand - Qantas
Enterprise Waitakere, 14 February 2003 - Qantas - Air New Zealand Alliance PDF (73 KB): The following submission relates to:

1.1 the application filed at the Commerce Commission (the "Commission") on 9 December 2002 by Qantas Airways Limited ("Qantas") to subscribe for up to 22.5% of the voting equity in Air New Zealand Limited ("Air New Zealand") (the "Equity Application"); and

1.2 the application filed at the Commission on 9 December 2002 by Qantas and Air New Zealand to enter into a strategic alliance (the "Alliance Application") (the Equity Application and the Alliance Application together referred to as the "Applications").
Export New Zealand,14 February 2003 - Proposal for Air NZ & Qantas to form a Strategic Alliance and The Government to sell shares in Air NZ to Qantas Airways PDF (134 KB): 1.1 Export NZ opposes the proposal to approve the Strategic Alliance between Air NZ & Qantas Airways and outlines why in section 3 below.

1.2 Coupled with the proposal for a Strategic Alliance between Air NZ & Qantas Airways, is the proposed cooperation agreement with Pacific Airlines which is also opposed and addressed in section 2 below.

1.3 Export NZ has concerns regarding the proposal for the government to sell shares in Air NZ to Qantas Airways and outlines these in Section 4 below.

1.4 Export NZ believes that the proposal for the government to sell its shares in Air NZ to Qantas Airways and the proposal to approve the Strategic Alliance between Air NZ & Qantas Airways must be looked at quite separately from each other as each have difference considerations, implications and variables.
Danny Freilich, 14 February 2003 - Air NZ - Qantas PDF (47 KB): Danny Freilich, 14 February 2003 - Air NZ - Qantas
Mackenzie District Council, 13 February 2003 - Submission to the Commerce Commission - Air New Zealand/Qantas Merger PDF (69 KB): As Mayor of the Mackenzie District Council, I wish to oppose the proposal currently before the Commission for Air New Zealand to form a strategic alliance with Quantas.
Hospitality Association of New Zealand, 14 February 2003 - Air New Zealand and Qantas co-operation agreement PDF (70 KB): The Hospitality Association appreciates the opportunity to add its comments to the Commerce Commission's enquiry into the application by Air New Zealand and Qantas to act co-operatively.
Debate Air NZ postcard, 14 February 2003 PDF (70 KB): Debate Air NZ postcard, 14 February 2003
Commerce Act 1986 - Section 58 Application By Air New Zealand And Qantas Airways Ltd - Submitted By Bon Voyage Marketing Ltd PDF (342 KB): This submission looks at the effects of the proposed merger on New Zealanders travelling both domestically and internationally, as this is the main area of our business operation.We leave those more involved to address the ramifications of the proposed merger on the inbound tourist market.

No doubt this merger proposal makes great financial sense to the executives on performance bonuses, board members and shareholders of the respective carriers. It is hugely enriching to all those parties but at a huge cost, we believe, to the New Zealand consumer.
Christchurch International Airport - Summision to Commerce Commision in Relation to Air New Zealand / Qantas Application (102 KB): Christchurch International Airport Limited (CIAL) seeks to have its interest registered in relation to the application by Air New Zealand and Qantas seeking authorisation of a restrictive trade practice (Section 60(3), Commerce Act) and the application by Qantas (supported by Air New Zealand) seeking authorisation for a business acquisition.
Submission of the New Zealand Council of Trade Unions to the Commerce Commission on the Proposed Alliance between Air New Zealand and Qantas PDF (197 KB): The New Zealand Council of Trade Unions (CTU) is the internationally recognised central trade union centre in New Zealand. It represents 34 affiliated unions with a membership of approximately 300,000.
Tim Hazledine Submission - Proposed Alliance between Qantas and Air New Zealand PDF (357 KB): - Qantas and Air New Zealand propose an 'Alliance' (cartel) covering their operations within and out of NZ, plus Qantas to take a 22.5% equity stake in Air New Zealand for $550million
- Qantas and Air New Zealand commissioned NECG to carry out a 'Public Benefit' Analysis of the Proposal
- This submission evaluates the proposal and the NECG Report
NCWNZ, 14 February 2003 - Submission to the Commerce Commission on the Air New Zealand and Qantas Strategic Alliance Agreement PDF (71 KB): The National Council of Women of New Zealand (NCWNZ) is an umbrella organisation representing 42 nationally organised societies. It has 34 branches spread throughout the country to which women from some 150 societies are affiliated. Its purpose is to work for the well being of women, families and society through research, discussion and action.

This Submission is prepared by members of the Economics Standing Committee of NCWNZ. NCWNZ would like to thank the Select Committee for the opportunity to make comment.
Save Air New Zealand Submission by Mark Blumsky QSO and Dr Ian Prior ONZM - Applications of Air New Zealand Limited and Qantas Airways Limited 14 February 2003 PDF (140 KB): The Save Air New Zealand Group ("the Group") was formed in December 2002 when Air New Zealand Limited ("Air New Zealand ") and Government announced the intention to merge Air New Zealand's domestic and international business into a joint venture with its long time competitor Qantas Airways Limited ("Qantas"). With Qantas to also gain a 22.5% stake in Air New Zealand and board representation (jointly in this document called "the Alliance/Investment").
Origin Pacific, Submission on Air NZ/Qantas PDF (199 KB): As well as eliminating competition between Qantas and Air New Zealand on the
international and main trunk routes, the proposed alliance will have major impact on air services, particularly in what has been categorised as the provincial and tourist markets.
WIAL - Submission on Applications by Air New Zealand and Qantas Airways PDF (538 KB): In part of WIAL's submission is intended to draw the Commission's attention to certain aspects of the airline's proposals; in part it draws attention to deficiencies in the proposals and its supporting economic analysis. However, WIAL does not have access to all the information provided or available to the Commission. WIAL's submission therefore does not purport to provide the level and detail of economic analysis that we consider the Commission is required to undertake.
Ball - Air New Zealand / Qantas partnership PDF (46 KB): Ball - Letter Opposing Air New Zealand/Qantas partnership
Barclay - Why is Icelandair performing better then Air New Zealand PDF (43 KB): Why is Icelandair performing better then Air New Zealand
Screen Directors Guild Submission - Air NZ - Qantas Alliance PDF (62 KB): I am making this submission on behalf of my personal interests, business
interests and also in my position as an Executive Board member of the
Screen Directors Guild of New Zealand (SDGNZ).
David Butler, 14 February 2003 - Qantas / Air New Zealand / Air Pacific PDF (146 KB): David Butler, 14 February 2003 - Qantas / Air New Zealand / Air Pacific
Brisbane Airport Corporation Ltd. to Australian Competition and Consumer Commission - Proposed Qantas / Air New Zealand Alliance PDF (292 KB): Submission to the ACCC regarding the proposed Qantas/Air New Zealand Alliance by Brisbane Airport
Submission to the New Zealand Commerce Commission by New Zealand Chambers of Commerce and Industry - Application for Authorisation Under the Commerce Act by Air New Zealand Limited and Qantas Airways Limited PDF (433 KB): New Zealand Chambers of Commerce and Industry speak for the interests of businesses and their communities throughout New Zealand. Our goal is to promote faster economic growth for New Zealand through vibrant regional and national economics that create sustainable business development and employment opportunities.
Waikato Regional Airport Limtied (WRAL) - Submission on Air New Zealand / Qantas Application PDF (90 KB): WRAL owns and operates Hamilton International Airport. The airport services the Waikato region for domestic aviation services, and the whole of the Central North Island for international services.

WRAL is owned by five territorial authorities, which consider the airport to be a vital asset for the economic well being and development of the region. The ownership details are appended.
Peter Wakeman - Submission Concerning Air New Zealand and Qantas Application PDF (251 KB): Peter Wakeman - Submission Concerning Air New Zealand and Qantas Application
New Zealand Amalgamated Engineering Printing & Manufacturing Union (EPMU), 18 February 2003 - Case for Proposed Alliance Between Qantas and Air New Zealand PDF (153 KB): The New Zealand Amalgamated Engineering, Printing & Manufacturing Union ("EPMU" or "the union") is New Zealand's largest private sector union organising in a range of industries including aviation. Of our approximately 55,000 members nation-wide, we have approximately 3,000 employed in the aviation sector, predominantly by Air New Zealand Limited. Most of our members employed by Air New Zealand work in the engineering, terminal services, cargo and sales and marketing (reservations and airpoints) divisions.
UnitedTravel - Submission on Application by Air New Zealand Limited and Qantas Airways Limited PDF (340 KB): The Applicants' claim that "one of the most significant impacts of the Transactions is that they are likely to increase the spread of in-flight service quality in the market, by hastening the entry and expansion of a VBA service." (Application, p103) is particularly difficult to accept.
Inbound Tour Operators Council of New Zealand Comments to the New Zealand Commerce Commission on the Proposed Air New Zealand/Qantas Alliance PDF (254 KB): The Alliance proposal involves the co-ordination of pricing and scheduling, and also provides for the co-ordination of sales, marketing and customer service functions in the future.

ITOC is concerned that this proposal would lessen competition, lead to declining service standards and restrict the ability of new suppliers to enter the market. This will also result in insufficient capacity that fails to meet the needs of the market, with negative net impacts on the consumer, the wider industry and the country as a whole.

A regulated option would be a new policy approach in New Zealand but this potentially provides a bridge between the status quo and the Alliance proposal.
ITOC believes this would improve the sustainability of returns from new entrants. This scenario would also encourage new entrants into the market while preventing temptation towards predatory pricing that over the long-term is counter-productive to suppliers, consumers, the industry and New Zealand as a whole. This approach has been followed by the United States Department of Transportation's conditional approval of the Delta, Continental and Northwest Alliance. This option is set out in detail in the body of our submission.

In order for ITOC to support any Alliance as contained in the proposal, we strongly submit that appropriate conditions be imposed on the parties to the proposal to ensure any risks of market dominance, or intent to lessen competition are fully removed.
Gullivers Pacific - Submission on Air New Zealand / Qantas PDF (507 KB): Air New Zealand Limited and Qantas Airways Limited (the Applicants) acknowledge that they propose to engage in restrictive trade practices.

The Applicants seek authorisation from the Commerce Commission under Section 58 of the Commerce Act to enter into extensive collaborative arrangements that will significantly diminish the current level of competition in domestic, Trans-Tasman and international airline and travel distribution services and GDS markets of New Zealand and Australia.
Air New Zealand and Qantas Joint Arrangement Further submission from Gullivers Pacific Group PDF (95 KB): We would like to take advantage of the extended deadline for submissions to clarify our concerns, and to urge the Commission to give appropriate attention to the issues we raise during the investigation stage. We would welcome an opportunity to meet with the Commission staff ahead of the draft determination.
TAANZ - Submission on Air New Zealand/Qantas February 2003 PDF (244 KB): TAANZ welcomes the opportunity to comment on the proposed strategic alliance between Air New Zealand and Qantas.

This submission consists of the following:

1. A summary of the implications of the proposed joint airline operation for TAANZ members and others involved in the market for the sale of airline services.

2. The link between maintaining a healthy and viable travel agency distribution system and maintaining competition in the international air services market.

3. A brief statement as to what type of market for the supply of airline services is in the best interests of the public.

4. A brief assessment of some of the adverse impacts of the proposed alliance on the market for the supply of airline services.
Infratil, Prendergastetal - Submissions to the Commerce Commission Regarding Applications Made By Qantas Airways Limited and Air New Zealand Limited PDF (278 KB): These submissions relate to two applications filed by Qantas Airways Limited ("Qantas") and Air New Zealand Limited ("Air New Zealand") (together, the "Applicants")
Atlantic Pacific Radius - Air New Zealand Alliance / Qantas Application PDF (714 KB): Submission of observations with reference to markets affected by AirNZ/Qantas application for authorisation.
Hamilton Aero Maintenance, 18 February 2003 - Air New Zealand / Qantas Alliance PDF (241 KB): Hamilton Aero Maintenance Ltd owns and operates an aircraft maintenance and ground handling company on Hamilton International Airport. We provide ground-handling services to all commercial airlines operating into this airport and also complete all maintenance on Freedom Air Internationals aircraft up to "A" check level. The company currently employs 38 full and part-time employees to handle this workload.
Jan Rivers, February 2003 - Don't Sell Aur New Zealand PDF (67 KB): I wish to strongly express our opposition to the proposed alliance between Air New Zealand and its competitor Qantas.
Shallcrass - Air New Zealand/Qantas Alliance PDF (74 KB): Shallcrass - Air New Zealand/Qantas Alliance
Clive Tunley, February2003 - Qantas / AirNZ Alliance PDF (120 KB): Clive Tunley, February2003 - Qantas / AirNZ Alliance
Sean Fletcher - Submission against Strategic Alliance between Qantas & Air New Zealand PDF (48 KB): In my opinion the proposed merger between Air New Zealand and Qantas is not in the consumer's or New Zealand's best interests.
TimHazledine - Response to Submissions in relation to NECG's Report PDF (132 KB): The Network Economics Consulting Group was commissioned by Air New Zealand and Qantas to put the economic case for their proposed cartel covering these airlines' operations in and out of New Zealand. The New Zealand Commerce Commission and the Australian Consumer and Competition Commission posted the NECG Report and invited submissions, which they received from a number of interested and independent parties, including amongst the former Frontier Economics on behalf of Virgin Blue, and amongst the latter my own analysis of the situation. On March 5, 2003, the Commissions posted a revised set of figures from NECG, with a brief covering letter. Later, NECG's 64-page response to the submissions was posted. What follows is my own rejoinder to NECG's response and the revised figures.
Patric Barry - Qantas/Air New Zealand Proposed Merger PDF (86 KB): I am an airline consultant with management and organization experience at several major airlines, am an Australian citizen and a resident of California in the United States. I have been asked to comment on points of the proposed merger between Qantas and Air New Zealand.
Bernard Feehan - Submission on Air NZ/Qantas - 21January2003 PDF (46 KB)

Application

05/03/2003 (19 documents)

QF-NZ-FJ Cooperation Agreement - Final PDF (14 KB): QF-NZ-FJ Cooperation Agreement - Final
Minter Ellison Rudds Watt, submission on Air New Zealand / Qantas PDF (7.8 KB): We refer to the Notices seeking Authorisation under sections 58 and 67 of the Commerce Act dated 9 December 2002.
Air New Zealand Limited And Qantas Airways Limited - Commerce Act: Restrictive Trade Practice Section 58 Application PDF (283 KB): The Strategic Alliance creates a Joint Airline Operation network (the JAO Networks) which, once fully implemented, will be commercially managed by Air New Zealand. However, the day to day flying operations will remain the responsibility of each airline. All Air New Zealand flights will be part of the JAO Networks, together with all Qantas flights into, within and departing from New Zealand. There are also extensive reciprocal rights for codesharing on
each other's services. By way of example, this will enable Air New Zealand to obtain feeder traffic from codesharing on connecting flights on Qantas' Australian domestic and international networks.
Air New Zealand Limited And Qantas Airways Limited - Commerce Act: Business Acquisition Section 67 Application PDF (47 KB): This is an application by Qantas Airways Limited (ABN 16 009 661 901) (Qantas) seeking authorisation to subscribe for up to 22.5% of the voting equity in Air New Zealand Limited (Air New Zealand) pursuant to a Subscription Agreement between Air New Zealand and Qantas (the Equity Application). The Application is supported by Air New Zealand. (Together, Air New Zealand and Qantas are called the Parties.) A separate application seeking authorisation for a Strategic Alliance Agreement and certain
Related Agreements is filed simultaneously with this Application (the Alliance
Application). Together these are called the Applications.
NECG Report - Report on the Competitive Effects and Public Benefits Arising from the Proposed Alliance between Qantas and Air New Zealand PDF (1.7 MB): This report sets out an economic analysis of a proposed alliance between Air New Zealand and Qantas. The proposed alliance involves Air New Zealand and Qantas entering into a Strategic Alliance Agreement (the "Alliance"), which will regulate their respective airline operations on all routes operated by Air New Zealand and those operated by Qantas to, from and within New
Zealand. As a condition of the Alliance, Qantas will acquire up to a 22Â½% shareholding in Air New Zealand.
Glossary - Air New Zealand Limited and Qantas Airways Limited PDF (794 KB): Glossary - Air New Zealand Limited and Qantas Airways Limited
Air New Zealand Limited & Qantas Airways Limited Strategic Alliance Undertakings to be Provided to the ACCC PDF (21 KB): A summary of Air New Zealand Limited & Qantas Airways Limited strategic alliance undertakings to be provided to the ACCC
PwC - Air New Zealand Limited/Qantas Airways Limited PDF (1 MB): PwC - Air New Zealand Limited/Qantas Airways Limited
Australasian Tourism Review PDF (682 KB): The purpose of this report is to assess the reasonableness of the claim that the proposed Alliance between Qantas and Air New Zealand would generate an additional 50,000 inbound tourists to New Zealand and an additional 18,000 inbound tourists to Australia compared with the future without the Alliance. These form part of the overall tourism impact with other elements - promotional effects, fares and products - assessed in NECG's report on the
competitive detriments and public benefits associated with the proposed Alliance.
Qantas Holidays - Marketing & Sales Plan for Growing NZ Inbound Market under The Alliance PDF (277 KB): The document represents a Marketing & Sales plan that has been developed as part of the proposed Alliance between Qantas (referred to as QF) and Air New Zealand (referred to as Air NZ).
NZCC and ACCC Information Request - NECG analysis of competitive detriments and public benefits of the proposed Alliance between Qantas and Air New Zealand PDF (296 KB): The NECG analysis provided to the NZCC and ACCC in spreadsheet form relies on a number of inputs and assumptions. This section outlines the information utilised in NECG's analysis and provides a brief summary of this information.
Response to Submissions in relation to NECG's Report PDF (629 KB): This paper provides NECG's response to the submissions made to the New Zealand Commerce Commission ("NZCC") and the Australian Competition and Consumer Commission ("ACCC") in relation to NECG's Report on the Competitive Effects and Public Benefits Arising from the Proposed Alliance between Qantas and Air NZ.
Air New Zealand / Qantas Authorisation Applications - Responses to Third Party Submissions PDF (140 KB): AirNZ and Qantas responses to third party submissions concerning their authorisation application
Air New Zealand Limited/Qantas Airways Limited Updated Executive Summary PDF (155 KB): On 9 December 2002, Qantas and Air New Zealand ("the parties") lodged
applications for authorisation of an Alliance with the New Zealand Commerce
Commission and the Australian Competition and Consumer Commission (the
"NZCC" and "ACCC" respectively). Since that date, the parties have had extensive interactions with the Commissions; the Commissions have received submissions in respect of the applications from a wide range of interested parties; the issues raised by the applications have been the subject of considerable media attention; and of course, international aviation and the context in which the parties operate have not stood still. It is therefore appropriate for the parties to restate and update the key arguments they put to the Commissions at the time of initial filing.
Australasian Tourism Review: Update PDF (72 KB): As noted elsewhere, the tourism benefits of the proposed Alliance are covered in detail in the TFI report of February 2003 and the Qantas Holidays (QH)/Air New Zealand business plan sent to the commissions on 6 March 2003.
EGBL Rulebook - Conditions and Undertakings PDF (21 KB): EGBL Rulebook - Conditions and Undertakings
Letter - Revised NECG Model PDF (36 KB): Accompanying this letter is the revised version of the NECG model. The model
incorporates the changes detailed in NECG's letter of 21 January 2003 as well as
changes following from the withdrawal of United from the AKL-LAX sector. There
have also been a number of relatively minor changes to the model reflecting issues
raised by the ACCC in its letter dated 10 February 2003.
NECG - Changes To NECG Modelling Results PDF (184 KB): Following the submission of NECG's report dated 8 December 2002 we have identified a number of required changes to the models on which our analysis relies, which alter the results presented in our report.
NECG Analysis of the Proposed Alliance between Air New Zealand and Qantas - Presentation PDF (690 KB): NECG Analysis of the Proposed Alliance between Air New Zealand and Qantas - Presentation

Documents