Qantas-Air New Zealand codeshare deal will lessen competition: Australian Airports Association

Australia’s peak body for airports says the new Qantas-Air New Zealand codeshare deal will likely lessen competition.

Australia’s peak body for airports says the new Qantas-Air New Zealand codeshare deal will lessen competition and has the potential to constrain the trans-Tasman market.

The Australian Airports Association has called on regulators in Australia and in New Zealand to make sure the agreement won’t impact travellers or Virgin Australia, saying the deal would likely lessen competition on both sides of the Tasman.

“There are a limited number of airlines operating in both countries, and between them, so it is important there remains a healthy level of competition in the market,” said association chief executive Caroline Wilkie.

“This arrangement seems likely to make it harder for Virgin Australia to compete in the Australian market.”

It comes after Qantas (QAN) and Air New Zealand said they’d will remain competitive on trans-Tasman routes as they announced a deal to that will add 115 new domestic routes in Australia and New Zealand on Friday.

The deal, which will come into effect in October, would result in co-ordination of check-in and handling at airports will mean shorter connection times for all customers, while eligible customers will have access to lounges on both sides of the Tasman when flying on routes covered by the codeshare agreement.

A spokesperson for Virgin Australia, which has an interlining agreement with Air New Zealand up for renegotiation in October, said last week that the deal was “bad news for customers” and that it would stifle competition.

“We are particularly concerned this arrangement will further strengthen Qantas’ dominant position in the Australian market to the detriment of both Virgin Australia and the Australian travelling public,” Ms Wilkie said today.

“The ability to distribute each other’s passengers on the other side of the Tasman will improve the market position of Qantas and Air New Zealand and make it harder for Virgin to compete on trans-Tasman routes.

“It is important to ensure both the Australian and New Zealand economies enjoy the tourism benefits of easy and affordable trans-Tasman travel and this can only be ensured if there are more carriers, not less, flying these routes.”

Ms Wilkie said that the details for the agreement should be publicly examined by competition watchdogs to ensure there are not anti-competitive impacts.

“This is the only way to ensure competitive and affordable aviation markets in and between Australia and New Zealand and a visitor economy spanning the two countries that delivers to everyone the economic benefits associated with trans-Tasman travel,” she said.