Emirates objects to Virgin claim on NZ route
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.
Frequently Asked Questions about this Article…
Emirates has asked the ACCC to refuse Virgin and Air New Zealand’s request because it says Virgin hasn’t shown that cheaper fares are the result of their alliance. Emirates argues relaxing conditions would create regulatory distortions and that the same conditions imposed on the Qantas–Emirates tie‑up should apply to its rivals given the competitive impact.
Virgin and Air New Zealand are lobbying the ACCC to drop conditions that require them to retain a certain number of flights on trans‑Tasman routes. They are also seeking a five‑year extension of their alliance, saying the current conditions can create distortions and inefficiencies.
According to Emirates and supporting commentators in the article, Virgin has not demonstrated that cheaper fares resulted from the alliance rather than from broader competition dynamics on trans‑Tasman routes involving carriers like Qantas, Jetstar and Emirates.
Qantas has urged the ACCC to 'thoroughly test' rivals’ claims that the Virgin–Air New Zealand alliance has delivered passenger benefits, signaling scepticism and asking the regulator to scrutinise the evidence.
The article says the Virgin Australia–Air New Zealand alliance has a combined market share of almost 57% on the trans‑Tasman market, while Qantas, Jetstar and Emirates together have about 40%.
When the ACCC approved the Qantas–Emirates alliance for five years, it required Qantas and Emirates to keep capacity on four overlapping trans‑Tasman routes at current levels to protect competition on those routes.
The Virgin–Air New Zealand approval expires at the end of this year and the partners are seeking a five‑year extension. Qantas and Emirates recently won ACCC approval but are still waiting on New Zealand Transport Minister Gerry Brownlee to approve extending their tie‑up to the Tasman; the article notes he is widely expected to approve the deal.
Regulatory decisions on airline alliances affect capacity rules, market share and competitive dynamics on key routes. Those factors can influence ticket pricing, revenue and profitability for carriers such as Virgin Australia, Air New Zealand, Qantas, Jetstar and Emirates—so investors monitoring these rulings can better assess potential impacts on airline share performance.
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