Air New Zealand Seeks To Delay Qantas-American Airlines US Operations In Peak December Season

Faced with the prospect of rising competition from the alliance of Qantas and American Airlines, Air New Zealand has approached the Australian regulator to urge its rivals to put off their operations to June 2016, than starting it in the peak December 2015 season.

Air NZ is locked in a fierce battle with Australia’s Qantas Airways on two fronts-domestic as well as overseas. In the overseas business, a co-ordinated increase in capacity is in sight as Qantas and American Airlines are in an alliance on the trans-Pacific route and getting ready to cut into Air NZ market share. In a submission to the competition regulator, Australian Consumer and Competition Commission, Air NZ said there is "no compelling reason" why the revenue-sharing alliance between Qantas and American should start in December 2015 as they could do code-sharing or wet-leasing under the existing alliance approvals that are valid until June.

Qantas-American Alliance

Qantas also put Air NZ under pressure in its domestic turf by announcing the launch of Jetstar services to regional cities in New Zealand, besides sewing a deeper alliance with American Airlines. The alliance with American will allow Qantas services on the Sydney-San Francisco route while American will operate daily flights from Sydney to Los Angeles, resulting in a 9 percent excess capacity in the Australia- United States route. The partners have plans to fly from Auckland to Los Angeles as early as 2016 and will eat into Air NZ's highly lucrative monopoly market between New Zealand and mainland U.S.

Air NZ contends that Qantas and American have not provided “compelling evidence” that their deeper alliance will not harm competition. Air NZ apprehends more competition for Australian passengers after the alliance takes wings on its trans-Pacific flights to Los Angeles, San Francisco, Vancouver and soon Houston via Auckland. Air NZ also noted that Qantas and American would be increasing co-operation on the Sydney-Dallas route, which is not operated by any other airlines.

Objections Rejected

Meanwhile, Qantas and American Airlines said the planned launch of their new services between Australia and the U.S. will not proceed without the nod from regulators and described Air New Zealand’s objections as “misunderstanding the nature of the proposed conduct." They sought ACCC approval for an updated joint business agreement to reflect American’s plan to commence a daily Sydney-Los Angeles service and Qantas’s return flight to San Francisco from December 2015.

They applied for interim authorisation from the ACCC for starting ticket sales and promotional activity during the time the regulator continues with the assessment of the full application. “Interim authorisation is urgent,” Qantas and American told the ACCC in a submission dated July 3. “The ability to conduct a coordinated strategic campaign is the only way to enable a viable launch for these important new services.” Qantas and American’s submission noted in response to Air NZ’s objections to the interim authorisation.

(For feedback/comments, contact the writer at k.kumar@ibtimes.com.au)