The Australian Competition and Consumer Commission (ACCC) on Tuesday rejected plans for an alliance between Air New Zealand and Australian carrier, Qantas, arguing that such a move would be extremely anti-competitive, and would give the two firms around 90% of the market share for trans-Tasman flights.
Although, following its initial rejection earlier this year of the plans for Qantas to pay NZ$550 million for 22.5% of Air NZ, the ACCC's verdict on the link-up was expected, a 12% drop in the value of Air New Zealand's shares which occurred as a result of the decision took analysts by surprise.
ACCC chairman, Graeme Samuel observed this week that: 'Under the circumstances the ‘national interest’ would seem better served by continued competition between Qantas and Air New Zealand than an alliance. Both parties have indicated publicly that neither airline is realistically in danger of failure even in the medium term.'
However, observers have suggested that Air NZ is still in need of a cash injection, in order to pay for a fleet upgrade amongst other things, and will now be obliged to look elsewhere.
Both companies had cited the recent entry into the trans-Tasman market of the Emirates airline, and the pending entry of the Virgin Blue service as factors contributing to the need for an alliance.
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