Qantas statement on NZCC decision

Sydney, 23 October 2003

Qantas said today it would hold discussions with Air New Zealand before deciding on a future direction for the two airlines’ proposed alliance.

The Chief Executive Officer of Qantas, Geoff Dixon, said the talks would take place over the next few weeks and would canvass all options.

“We still believe an alliance between Qantas and Air New Zealand is in the best interests of aviation in this region and would deliver significant benefits to travellers and tourism,” Mr Dixon said.

He said the New Zealand Commerce Commission, like the Australian Competition and Consumer Commission, had taken a very narrow view of competition and consumer interests and either ignored or underestimated the significant structural challenges facing the aviation industry.

“The decisions of the NZCC and the ACCC are at odds with what is occurring around the world,” Mr Dixon said.

“In Europe, Air France and KLM have just signed a merger agreement that will see them operate a total of 540 aircraft and employ 106,000 people. Other European airlines are holding discussions, while British Airways has indicated it may revive its plans for greater co-operation with American Airlines.

“More broadly, the European Union and the United States have commenced talks about dropping barriers between their markets to form a Transatlantic Common Aviation Area. Once this occurs, airlines will be encouraged to invest in each other across national boundaries.

“In the United States, Delta, Northwest and Continental have been given approval to form a three-way alliance while US Airways and United Airlines have recently expanded their codeshare alliance to cover 1600 flight segments.

“There are simply too many airlines in the world today and it is inevitable that there will be further pressures toward consolidation and some very large and powerful groups could emerge.”

Mr Dixon said Qantas would look for suitable opportunities in this changing environment while continuing its current strategies of driving down costs, setting up a low cost airline in Australia and investing in, and growing, both its domestic and international premium airlines.

Issued by Qantas Corporate Communication (2980)