Canberra Airport supports trans-Tasman alliance

A planned controversial alliance between Air New Zealand and Virgin Blue has received the backing of Canberra Airport, in contrast to its sister capital city airport Wellington.

Air New Zealand and Virgin Blue, which flies as Pacific Blue on the Tasman, say they must be allowed to work together to compete against the growing power of Qantas and its budget offshoot Jetstar.

Wellington International Airport is opposed to the airlines' plans to effectively merge their trans-Tasman operations, claiming it will lead to higher fares and reduced services.

Those concerns also led to the Australian Competition and Consumer Commission rejecting the alliance application in a draft decision last month.

But Canberra Airport, which has until now remained out of the debate, says in a submission that the alliance would significantly benefit travellers and the city.

Unlike Wellington, Canberra has no direct flights to any New Zealand centre.

Canberra Airport managing director Stephen Byron said that rather than substantially lessen competition on the Tasman, it would increase it.

"Even if this was not the case, Canberra Airport believes that the proposed alliance would . . . result in significant benefit which would outweigh any public detriment caused by any lessening of competition," Mr Byron said.

The alliance would result in more flights, simplify bookings and improve connections between domestic and international flights.

The alliance would stimulate the trans-Tasman market by forcing the Qantas-Jetstar group to respond competitively.

"With strong operators in the market the competitive response from both parties would be expected to be lower prices coupled with more flights to more ports."

That would significantly increase the likelihood of new direct services between Wellington and Canberra.

A new link between Auckland and Canberra would also provide access to connecting Air New Zealand flights to the United States.

While the alliance would have a combined trans-Tasman market share of more than 50 per cent, on the biggest routes between Sydney and Melbourne to Auckland and Christchurch, the market was evenly split between Qantas- Jetstar and Air New Zealand- Virgin Blue, Mr Byron said.

There was a real risk of Virgin Blue reducing, or pulling off the Tasman if the alliance was not approved, which would reduce competition, he said.

A Wellington group, including the airport, business and political interests, has named a direct "capital connection" service to Canberra as one of the concessions it wants from Air New Zealand to win their support for the alliance.

The group also wants fare and capacity assurances.

Air New Zealand had indicated it would provide a response to the group's key concerns when the airline filed its updated proposal with the ACCC.

Air New Zealand chief executive Rob Fyfe has said the concerns from the ACCC were similar to those expressed by the Wellington group and "the one answer will address the interests of both".

The two airlines have until Monday to respond to the ACCC.

- © Fairfax NZ News