Competition Policy for the Trans-Tasman Air Travel Market: the 2005 ACT Decision and its Implications

Abstract

Qantas and Air New Zealand are seeking regulatory authorisation for a Tasman Networks Agreement that would in effect cartelise their trans-Tasman operations. They cite in support Reasons given by the Australian Competition Tribunal in its authorisation of their previous application to form a 'Strategic Alliance'. The ACT determined that a cartel-like arrangement between these airlines would not substantially lessen competition across the Tasman because of competition from Pacific Blue and Emirates despite the latter's very small current market share on these routes. This paper examines the ACT's reasons and finds them lacking in economic logic as well as being inconsistent with the facts of airline market competition in Australasia. The paper suggests that the ACT is not an appropriate forum for hearing civil matters such as this and proposes an alternative process based rather on the present procedures adopted by the competition commissions of Australia and New Zealand