Qantas to lodge submission on Air NZ alliance

Sydney, 29 April 2003

Qantas said today it would lodge a written submission in response to the draft determination of the Australian Competition and Consumer Commission (ACCC) on its proposed alliance with Air New Zealand.

Qantas will lodge the submission by 9 May 2003. However, the airline has not requested a pre-determination conference with the ACCC.

The Chief Executive Officer of Qantas, Geoff Dixon, said the airline believed it had made a strong case to the ACCC that the alliance would deliver significant benefits to consumers, tourism and the economy of both Australia and New Zealand.

"This view has been subsequently supported by just about every independent expert and commentator," he said. "Only the ACCC appears to think differently."

Mr Dixon said he believed the ACCC had either ignored or underestimated the fundamental challenges facing airlines around the world. He said there was a pressing need for Qantas and Air New Zealand to participate in the restructuring and consolidation in order to provide the foundation of a strong, long term viable and internationally competitive airline industry in Australasia.

He said the proposed alliance therefore involved important and broad national interest considerations and the authorisation process should not focus solely on consumer and competition interests.

The Qantas submission will highlight a range of issues, including:

* Qantas and Air New Zealand are not immune from the ongoing problems and changes facing the global aviation industry;* the aviation industry's problems are long term, began well before 11 September, 2001 and have been exacerbated by the Iraq war and SARS;* the future for Air New Zealand, without the proposed alliance, would involve the inevitable contraction of its international operations;* Virgin Blue has stated unequivocally that it will enter the trans-Tasman and domestic New Zealand markets and be a significant competitor; and* real and substantial benefits flow from the alliance.

"Qantas acknowledges that, under the alliance, there will be areas where competition is reduced," Mr Dixon said. "However, other airlines including Virgin Blue will continue to provide strong competition in these areas.

"Furthermore, these areas constitute a small part of the combined networks of Qantas and Air New Zealand and, overall, both airlines will continue to operate in an intensely competitive market where many of the other players, through government ownership and subsidies, do not have the same disciplines.

"Surely, in these circumstances, a regulatory body should look beyond the narrow confines of one aspect of the total market."

Mr Dixon said Qantas had requested that the ACCC finalise its draft determination as soon as possible so that the airline could, if necessary, lodge an appeal with the Australian Competition Tribunal.

He said this approach was within the normal provisions of the Australian competition regulatory approval process.

Qantas and Air New Zealand are in discussions with the New Zealand Commerce Commission to determine the best process to follow in New Zealand.

Issued by Qantas Corporate Communication (2908)