$6m deal eases trans-Tasman rivalry

22:48, Jun 27 2013

Air New Zealand signed its biggest tourism marketing deal outside of New Zealand on Thursday, committing A$3 million (NZ$3.7m) over the next three years to help Tourism Australia ­promote itself abroad.

Under the agreement - where Tourism Australia has also committed A$3m - the two organisations will undertake joint marketing activities such as advertising, public ­relations and events, all aimed at attracting more visitors from three of Australia's largest source of ­tourists: New Zealand, Canada, the US and China.

Air New Zealand chief executive Christopher Luxon flew into Sydney for the occasion, pointing out the two countries might traditionally be ­tourism rivals - but one-third of American tourists who visit New Zealand travel on to Australia, often flying Air New Zealand.

"Air New Zealand has been flying [to Australia] since 1940," he said. "We're investing heavily in trans-Tasman routes with 34 Australian ports linked to 26 New Zealand ports.

"This is about [working together to] convert opportunities in foreign markets. China is an untapped opportunity. They are predicting 400 million Chinese will be travelling abroad in five years." 

The deal follows a dramatic turn of events for Australia's peak tourism body late last year, when Qantas Airways chief executive Alan Joyce pulled millions of dollars of real and contra funding from Tourism Australia and accused its chairman (and former Qantas CEO) Geoff Dixon of trying to destabilise the carrier.

Joyce said Dixon had an "untenable conflict of interest" because he held shares in Qantas at the time, where Joyce accused him of being "part of [a] club that is very much out there briefing against the company".

Joyce was referring to Dixon's involvement in a group, led by investment banker Mark ­Carnegie, that held a 1.5 per cent stake in Qantas.

In January, Dixon and the rest of the high-profile group sold out of Qantas and netted about A$18m.

A close friend of Dixon, ­Tourism Australia's managing director Andrew McEvoy, praised Qantas last night, saying everyone had moved on.

"We're open to working with Qantas," McEvoy said. "This is about how we can attract more people to Australia." 

Tourism Australia not dependent on Qantas

He reiterated that Tourism ­Australia was not dependant on ­Qantas, boasting marketing agreements with 24 international airlines, including A$10m with Jetstar; A$12m with Virgin Australia (in which Air New Zealand has a significant stake) and A$14.3 million with Emirates.

Qantas is reallocating funds ­previously destined for Tourism Australia to state tourism bodies.

In April, Joyce signed a A$30 million, three-year agreement with NSW. It was the state's largest tourism and events marketing deal.

McEvoy said: "New Zealand, America and China account for more than a third of Australia's annual international arrivals and, importantly, all three markets are growing. This deal provides a strong platform from which to further grow in-bound tourism from all three of these key markets."

In 2012, New Zealand was ­Australia's largest source of tourists, with 1.2 million visitors, who spent A $2.3 billion. Tourism Australia ­estimates it has the potential to reach A$4.2b by 2020.

Between them, Air New Zealand and Virgin carry more than 50 per cent of trans-Tasman traffic.

"We welcome the opportunity to engage in joint promotional activity in China and North America," Luxon said.

"As a market experiencing ­exponential growth, China presents a huge opportunity for our industry, while the North American market continues to go from strength to strength for our region."