Emirates objects to Virgin claim on NZ route

Qantas' alliance partner Emirates wants the competition regulator to refuse demands by Virgin Australia and Air New Zealand to loosen conditions on their tie-up on trans-Tasman routes.

Emirates has questioned Virgin's claims that its alliance with Air NZ has reduced fares between Australia and New Zealand, suggesting that is more likely to be a result of competition from itself, Qantas and Jetstar.

Qantas has also urged the Australian Competition and Consumer Commission to "thoroughly test" its rivals' claims that their alliance has benefited passengers.

Virgin is lobbying the ACCC to drop conditions on its alliance that require the two airlines to retain a certain number of flights on trans-Tasman routes.

In seeking a five-year extension to their tie-up, Virgin and Air New Zealand have argued that the conditions have the "potential to create significant distortions and inefficiencies".

Emirates has told the ACCC that the same conditions recently imposed on its trans-Tasman alliance with Qantas should apply to their rivals, which have a combined market share of almost 57 per cent. In contrast, Qantas, Jetstar and Emirates have about 40 per cent of the trans-Tasman market.

"It would create regulatory distortions if the [Virgin-Air New Zealand] alliance was not subject to the same regulatory conditions," Emirates told the ACCC.

Emirates said Virgin had not demonstrated that cheaper air fares had arisen from its alliance with Air New Zealand, rather than the "competition dynamics on the trans-Tasman".

While they won approval from the ACCC three weeks ago, Qantas and Emirates are still waiting for a decision by New Zealand Transport Minister Gerry Brownlee to extend their tie-up to the Tasman. Mr Brownlee is widely expected to approve the deal.

The trans-Tasman route has been the most contentious part of the alliance between Qantas and Emirates, whose main business is on routes to Europe via Dubai.

In recently granting them approval for five years, the ACCC has forced Qantas and Emirates to keep capacity on four overlapping trans-Tasman routes at current levels.

The alliance between Virgin and Air New Zealand has been in place since January 2011 but regulatory approval for it expires at the end of this year.