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Regulators foil proposed ANZ-Qantas alliance again

As expected, Air New Zealand’s hopes of rescuing its proposed alliance with Qantas in its present form were killed off after the New Zealand High Court rejected an appeal by the two carriers. The NZ Commerce Commission earlier this year ruled against the alliance. While the Australian Competition Tribunal still is considering a second appeal on the partnership proposal, the outcome is academic as the airlines require approval in both countries for the alliance to proceed. Both now will consider whether any other options exist for them to cooperate that would be acceptable to regulatory authorities.

Under the proposed plan, Qantas was to take 22.5% of ANZ and the two were to enter into a strategic partnership enabling them to operate together on services across the Tasman, within their domestic markets and on international flights out of New Zealand.

In a statement, ANZ head Ralph Norris expressed disappointment that the court had not allowed the airlines “to take this opportunity to introduce some rationality into a market that in recent years has been anything but rational. While ANZ is in a much stronger position both financially and competitively than when the alliance discussions began, compelling reasons for an alliance still remain.”

Norris said ANZ will review the High Court decision over the next few days before “discussing possible options with Qantas, which may include other forms of an alliance and opportunities that do not conflict with the Commerce Act.”

Despite the failure of the appeal, Norris said ANZ has established a “robust platform” to enable the 82% government-owned carrier to continue growing in the short to medium term. “While we are cautiously confident that initiatives in train over this period will provide for the long term, given the inherent volatility and intense competition in this industry, this will be a considerable challenge,” he added