Qantas-NZ deal rejected

[oz_mark]

From The Australian

Qantas-NZ deal rejected | Aviation | The Australian

Qantas-NZ deal rejected
Steve Creedy, Aviation writer
November 04, 2006

AIR New Zealand warned last night it would be forced to slash flights across the Tasman after Australia's competition watchdog moved to scotch a proposed price-fixing deal with Qantas.

The airlines wanted a deal that would give them 80 per cent of the trans-Tasman market, Australia's busiest overseas route, and allow them to co-ordinate routes, aircraft, schedules and fares.

..more..

 

[garyjohn951]

Iwish these airlines would stop the winging, the rest of the business in Aussie/nz have to compete, no strings attached. If they are losing money, then stop flying the routes.
If i produce butter and cannot compete, I quit , simple

 

[maninblack]

Iwish these airlines would stop the winging, the rest of the business in Aussie/nz have to compete, no strings attached. If they are losing money, then stop flying the routes.
If i produce butter and cannot compete, I quit , simple

Surely the appropriate metaphor here is "bread and butter".

 

[JohnK]

Not surprised. I feel this is the right outcome. If they have to cut down on the number of routes then so be it.

 

[oz_mark]

Not surprised. I feel this is the right outcome. If they have to cut down on the number of routes then so be it.

I suspect they would have cut down on the flights either way.

 

[JohnK]

I suspect they would have cut down on the flights either way.

You are right. I remember reading something in original proposal about both airlines reducing flights to increase overall capacity per flight.

 

[dajop]

Well maybe they should stop chasing each other around and fly some differentiated schedules! And get some sensible schedules, e.g. surely there is a demand for one of the two airlines to run a flight from MEL-AKL that gets into AKL before 5:20pm? Perhap a 7am that gets in around 12:30pm? Would do the trick. Oh that's Emirates time slot. Compete with each other, but certainly not them!

 

[serfty]

Well maybe they should stop chasing each other around and fly some differentiated schedules! And get some sensible schedules, e.g. surely there is a demand for one of the two airlines to run a flight from MEL-AKL that gets into AKL before 5:20pm? Perhap a 7am that gets in around 12:30pm? Would do the trick. Oh that's Emirates time slot. Compete with each other, but certainly not them!

Yeah, before QF25 was routed ex MEL, we had QF33 departing 9:30am to arrive LOTLWC ~2pm.

Personally the ~noon 747 option works far better for me.. YMMV.

 

[Kiwi Flyer]

Yeah, before QF25 was routed ex MEL, we had QF33 departing 9:30pm to arrive LOTLWC ~2pm.

That's a neat trick - time travel.

 

[serfty]

That's a neat trick - time travel.

:shock:

 

[Yada Yada]

Not surprised. I feel this is the right outcome. If they have to cut down on the number of routes then so be it.

Yes, I agree it is the right outcome, although I'm a bit surprised because QF seems to get what it wants from the Federal Government. Not that the Federal Govt in any way influences outcomes at the ACCC. :shock:

My impression from a newspaper article some months ago was that QF has a contingency plan in the event the decision goes against them.

Is there anything stopping them from doing what they want by stealth? Say that QF and NZ both cut flights but ensure that a good shared schedule remains in place. Then they offer reciprocal FF points arrangements on flights across the pond. A neighbourly promotion if you like.

 

[Kiwi Flyer]

Is there anything stopping them from doing what they want by stealth? Say that QF and NZ both cut flights but ensure that a good shared schedule remains in place. Then they offer reciprocal FF points arrangements on flights across the pond. A neighbourly promotion if you like.

It has been a while since I brushed up on the relevant competition law, but this wouldn't be allowed (at least not if it was obvious to the competition authorities what they were doing) - that is why they wanted agreement to proceed.

 

[JohnK]

Is there anything stopping them from doing what they want by stealth?

Will be interesting to see how both airlines react to this decision.

Say that QF and NZ both cut flights but ensure that a good shared schedule remains in place.

I don't understand why they don't spread their flights out anyway. Why schedule 5-6 flights a day leaving 5 minutes apart?

Then they offer reciprocal FF points arrangements on flights across the pond. A neighbourly promotion if you like.

I don't see anything wrong with an arrangement like this as long as everything appears above board.

 

[Kiwi Flyer]

I don't understand why they don't spread their flights out anyway. Why schedule 5-6 flights a day leaving 5 minutes apart?

Because both airlines want to maximise yields - which sets the morning and evening flight times for business pax as well as longhaul connections. The timing of flights in the middle of the day are then determined by a/c schedules. To get a decent spacing in the schedule requires cooperation which not allowed to do (hence needed to request approval).

I don't see anything wrong with an arrangement like this as long as everything appears above board.

I thought you were against the codeshare arrangement and now you are for it (or only certain parts of it)?

 

[NM]

Is there anything stopping them from doing what they want by stealth?

Yes, the law in both Australia and NZ. Any such collusion without permission would be deemed anti-competitive behaviour. It would be like the petrol companies all raising and lowering their prices at the same time (oh, sorry, a bad example ).

 

[JohnK]

I thought you were against the codeshare arrangement and now you are for it (or only certain parts of it)?

I was against it in the way it was originally proposed. If am all for it if it improves the timing of flights, no price fixing ever, no booking classes, on either airline, excluded from FF points earning and the continuing availability of sale fares.

 

[Kiwi Flyer]

I was against it in the way it was originally proposed. If am all for it if it improves the timing of flights, no price fixing ever, no booking classes, on either airline, excluded from FF points earning and the continuing availability of sale fares.

No real difference from the proposal put forward (except I don't recall seeing if every booking class would be point earning on both FFPs, but then nothing stopping say QF offering points on everything if they want while NZ doesn't). As for sale fares, no one guarantees anything there. If they are cooperating then I'd expect a lot less sales than if not cooperating. As I posted earlier, they need to cooperate to improve the schedule timings.

 

[Altair]

I support the knock back. I never saw any benefits for the consumer, regardless of the spin that Fyfe and Dixon put on it. It was always for NZ and QF and not the consumer. I think if I was in AKL EK would be getting a look in from me.
Come on,how can NZ say they are fly the equivalent of 43 empty A320 daily? Does NZ have that capacity in their entire fleet? or is it poor reporting?
I never bought the argument of how many A20 are flying empty across the ditch. If it is such an issue why do they fly the 747, 777, 767 when they could use the A320, 737s instead? Oh that is what WLG gets.... .
PS I know why WLG gets what it gets and I am happy with the services and choice I can make. Oh is that competition?

 

[Yada Yada]

I don't understand why they don't spread their flights out anyway. Why schedule 5-6 flights a day leaving 5 minutes apart?

I guess it is classic competitive behaviour. It reminds me of a micro-economics lecturer at uni who asked: if there was one kiosk in the middle of a beach, and you wanted to open a second kiosk to compete, where would you put it? Lots of students though it would be better placed as far away from the other kiosk as possible, e.g. at one end of the beach. The answer of course was to put it in the middle right next to the other kiosk. Just like the old AN and TN schedules. They both flew to the same main destinations and departed within minutes of each other.

Yes, the law in both Australia and NZ. Any such collusion without permission would be deemed anti-competitive behaviour. It would be like the petrol companies all raising and lowering their prices at the same time (oh, sorry, a bad example ).

I'm not suggesting they collude on prices - competition seems to even this out quite well already. Even if they just offer a reciprocal arrangement for their FF's it might work, along with a few schedule "adjustments" (er, enhancements) over time. As you've alluded, the ACCC seems toothless against the oil companies on their price fixing and other obvious breaches (e.g. Alan Jones) that QF should be able to make it work.

 

[JohnK]

No real difference from the proposal put forward (except I don't recall seeing if every booking class would be point earning on both FFPs, but then nothing stopping say QF offering points on everything if they want while NZ doesn't). As for sale fares, no one guarantees anything there. If they are cooperating then I'd expect a lot less sales than if not cooperating. As I posted earlier, they need to cooperate to improve the schedule timings.

I think you will find there is difference from the original proposal mentioned "The airlines wanted a deal that would give them 80 per cent of the trans-Tasman market, Australia's busiest overseas route, and allow them to co-ordinate routes, aircraft, schedules and fares."

Co-ordinating airfares is price fixing and would more than likely stop sale fares. Certain booking classes not being eligible for points earning is based on the currect practice of Air NZ and QF with the JQ model.

I think the only similarity between my 4 points and the original proposal is the better timing of routes.