Pacific Blue making waves, says Qantas

SYD MH Biz: Pacific Blue making waves, says Qantas by Scott Rochfort,
Transport Writer

May 5, 2004 Pacific Blue had already emerged as the "price leader" in
the trans-Tasman market, Qantas said yesterday, despite the Virgin
Blue offshoot having just 5 per cent of the available passenger seats
into New Zealand and still steering clear of the main hub of Auckland.

On day two of the airline's bid to overturn the Australian Competition
and Consumer Commission's rejection of its proposed alliance with Air
New Zealand, Qantas contested that Pacific Blue was even having an
impact on air fares into New Zealand airports to which it did not fly.

Qantas head of fleet, network and alliances Paul Edwards said while
Pacific Blue only called at Wellington and Christchurch, it was having
an impact across the board. "We've got a situation where a lot of
Tasman travellers travel across New Zealand and they don't care
whether they start or finish in Christchurch or start or finish in
Auckland," he said.

During cross examination by the ACCC, Mr Edwards conceded Qantas's
22.5 per cent planned investment in Air NZ would take away the threat
of a foreign rival taking a share in the NZ carrier.

Counsel for the ACCC, Rowan Dark, SC, argued as one element of the
investment Qantas wanted to take away any risk of Air NZ (or its
low-cost subsidiary Freedom) setting up a domestic airline in
Australia, possibly in partnership with Singapore Airlines.

When pressed why Qantas needed to make an investment in Air NZ,
instead of just forging a closer relationship, Mr Edwards said a 22.5
per cent stake would act as the "glue" in the alliance.

But Mr Edwards added: "We want to be in a position that when we had
assisted them to get into [financial health], that they didn't become
an investment target."

Meanwhile, the deputy Prime Minister, John Anderson, said he was
confident the alliance would go ahead in some form.

"You will see, I think, more alliances and I dare say they [Qantas and
Air NZ] will keep working at it until they get something which they
think secures the best commercial outcome," Mr Anderson told AAP.
###