Australia goes cold on Air NZ
Keith Mason
New Zealand. Any carrier from either country could fly anywhere
within or between either country from Nov 1 1994, and any carrier
from either could have access to a specified number of routes to
third countries from the other on a staggered entry timescale from 1993.
Air New Zealand was the big winner from this. It already flies from
Australia (Brisbane) to Bangkok and Taipei, and will add Osaka from
October 30.
Much to the surprise (I think) of the politicians, Ansett did not
find the yields between Australia and New Zealand sufficiently
attractive to start a service, even though it has a NZ subsiduary
(NZ gave Australian carriers access to its domestic routes a few
years ago) and linking its two operations seems like a good idea.
Now Australia has gone cold on the idea, and on the eve of Australian
domestic rights for Air NZ, it has shut the door. The official reason
is that the treaty also included the intention to move towards
a common customs border, but there has been almost no progress
on this (sovreignty issues abound).
Unofficial spectulation includes the upcoming Qantas float (the
government will get more for the remaining 75% of Qantas if
Air NZ is locked out), and various cries about giving the farm
away (Australia has got very little out of the deal whereas
New Zealand is a big winner).
So it looks like the protectionists have won.
Air NZ is furious, and says it will be seeking international arbitration.
While not having given a startup data for domestic Australian operations,
April next year was rumored, with half a dozen or so 737s providing
an eastcoast shuttle to its emerging hub at Brisbane. (I expect that
Brisbane city officals are also dismayed about loosing the chance
of getting an international airline to hub there).
This move will probably be lamented within Asia as well. Singapore for
one has made represenations for having the (now mutilated) Australia
- New Zealand treaty extended to include SE Asia. That is, instead
of the current system of bilaterals, have a regional 'free' market
with no capacity controls and 'reasonable' on-carriage rights to
other areas.
The government certainly appears to be pre-occupied with the Qantas
float, so hopefully when that is over (next April) it might
get it senses back. I for one felt that the approach of the treaty
was in the right direction, and that New Zealand was an ok place to
start but that the ultimate direction had to be to Asia.
Keith Mason.
Michael Jennings
Keith Mason <ke...@ewd.dsto.gov.au> wrote:
>Two years ago Australia signed a 'free market' aviataion treaty with
>New Zealand. Any carrier from either country could fly anywhere
>within or between either country from Nov 1 1994, and any carrier
>from either could have access to a specified number of routes to
>third countries from the other on a staggered entry timescale from 1993.
>
>Air New Zealand was the big winner from this. It already flies from
>Australia (Brisbane) to Bangkok and Taipei, and will add Osaka from
>October 30.
>
>Much to the surprise (I think) of the politicians, Ansett did not
>find the yields between Australia and New Zealand sufficiently
>attractive to start a service, even though it has a NZ subsiduary
>(NZ gave Australian carriers access to its domestic routes a few
>years ago) and linking its two operations seems like a good idea.
I thought the issues were more regulatory than economic on
this. AFAIK, Ansett were not initially allowed to fly the lucrative
routes from Sydney (Sydney-Auckland in particular) but instead
were only allowed to fly from Melbourne, Adelaide etc. In addition,
they were not allowed to fly between their own (domestic) terminals
at each end, but were compelled to fly between common user international
terminals, making connections with domestic flights difficult.
>
>Now Australia has gone cold on the idea, and on the eve of Australian
>domestic rights for Air NZ, it has shut the door. The official reason
>is that the treaty also included the intention to move towards
>a common customs border, but there has been almost no progress
>on this (sovreignty issues abound).
On the other hand, there is no good reason for not doing this.
Australia and New Zealand are two very similar countries, with a common
language, a free trade agreement, and complete freedom for citizens of
one to live and work in the other. They have different visa requirements
for nationals of foreign countries who want to visit, but
this is a very minor issue and if the bureacrats on either side can't
solve that one, one wonders what they can solve. Oddly enough, despite the
fact that ties between NZ and Australia have been getting stronger in
recent years, progress has been backwards on this issue. When I travelled
from Australia to NZ in 1978 (I am an Australian citizen) I did not need
a passport to travel. When I went back in 1991 I did need one. This was
quite a regressive step.
This issue is linked to the aviation agreement, via the domestic
terminals issue I refer to above. I agree that what is happening here is
that the Australian government is mostly making excuses, but there is a germ
of truth in it. Australian airports have common user international terminals,
through which all international traffic passes. They also have domestic
terminals which belong (de facto, if not de jure) to the individual
domestic airlines. These are generally on opposite sides of the airport,
and (presently) have no provision for customs and immigration. Therefore,
if customs and immigration are required for flights between Australia and
New Zealand, Ansett cannot fly passengers from its own terminals. At the
The aviation agreement between the two countries was quite generous on the
part of Australia (or at least would have been if implemented). It gave
Air NZ the right to fly from Australia to third countries, as well as access
to Australian domestic routes. The major concession that Australia got in
return was the chance to let Ansett link up its two domestic systems in
Australia and NZ. The immigration issue and the initial decision to not
allow Ansett to fly Auckland-Sydney (which was designed to protect Qantas
and Air NZ) have prevented Ansett from getting this benefit. Therefore,
(at least from the point of view of the bureacrats) it looks like
the gains have been all NZ's. The agreement was always going to help
Air NZ more than the Australian airlines, but as thing are, it is
easy to see Air NZ getting large benefits and Ansett and Qantas getting
none at all. I can therefore see the motivation for the about face.
Having said that, the about-face was still pretty gutless.
In the above paragraph, all I have talked about is the short term
benefits to the airlines. In the long term, more competition would do
Australia's airlines good, as they have to compete with people other
than Air NZ, many of who are at the moment fitter than they are. Most
importantly, more competition would benefit consumers, which when it
boils down to it is much more important than short term advantages
and disadvantages for the airlines themselves. It would be in the
long term advantage of Australia to let Air NZ in, even if the Australian
airlines gained nothing at all in return. However, this argument in
favour of a free market is mind blowingly hard to bash into bureacrats
and governments.
>
>Air NZ is furious, and says it will be seeking international arbitration.
>While not having given a startup data for domestic Australian operations,
>April next year was rumored, with half a dozen or so 737s providing
>an eastcoast shuttle to its emerging hub at Brisbane. (I expect that
>Brisbane city officals are also dismayed about loosing the chance
>of getting an international airline to hub there).
I doubt there is that much Air NZ can do about it. It is still
better off with regard to fifth freedom rights via Australia than it
was before the deal, something that Australia will no doubt point out
if any arbitration occurs.
>
>The government certainly appears to be pre-occupied with the Qantas
>float, so hopefully when that is over (next April) it might
The government is being very shortsighted indeed if it is
only concerned with how high a price it gets. Having a healthy
aviation market (even from the point of view of govenment revenue)
is much more important than a one-off contribution to government
finances.
>get it senses back. I for one felt that the approach of the treaty
>was in the right direction, and that New Zealand was an ok place to
>start but that the ultimate direction had to be to Asia.
>
The treaty was very definitely in the right direction. The
whole push of Australia's aviation policy in recent years has been
(until now) in the right direction. The deal with NZ had obvious benefits
(not the least of which was a third domestic airline competing with the
existing two: something needed since the failure of Compass) and was
easily available. Deals with Asian countries (other than a few places
like Singapore who are obviously committed to free markets because
their interests in them are so obvious) are likely to be much more difficult.
Australia is not the only country in the region protecting its aviation
market.
Michael.
--
Michael Jennings
Department of Applied Mathematics and Theoretical Physics
The University of Cambridge. mj...@damtp.cambridge.ac.uk
'Condense fact from the vapor of nuance'. Hiro has never
forgotten the sound of her speaking those words, the feeling that came
over him as he realised for the first time how smart Juanita was.
- Neal Stephenson. Snow Crash.
RNA
Peter Loibl <p...@regent.e-technik.tu-muenchen.de> wrote:
>ke...@ewd.dsto.gov.au (Keith Mason) writes:
>
>[details deleted]
>
>So what is New Zealand going to do about that? Refusing Ansett
>Australia to serve their domestic New Zealand route any more?
That would be stupid. Ansett doesn't make much (any?) money on the
routes as it stands, but does keep the prices down for NZ consumers.
RNA
Keith Mason
> Australia and New Zealand are two very similar countries, with a common
> language, a free trade agreement, and complete freedom for citizens of
> one to live and work in the other. They have different visa requirements
> for nationals of foreign countries who want to visit, but
> this is a very minor issue and if the bureacrats on either side can't
> solve that one, one wonders what they can solve.
I agree. I can only come up with two suggestions for the procrastination.
The first is the cultural. Island nations take sovreignty issues much
more seriously than countries with land borders that people can walk accross.
The second is the vested intrests in the status quo. Qantas and Air New
Zealand both operate large aircraft (747 ex SYD, BNE, MEL -> AKL,
SYD ->CHC) at low frequencies (at most twice daily). On minor routes
they prefer to operate 767s 2 or 3 times a week instead of daily 737s.
If the immigration/customs isues were resolved and flights could operate
between any Australian and New Zealand airports, a lot more city pairs
would be offered (eg Gold Coast -> Auckland), and greater frequency in
smaller aircraft on the trunk routes. In this senario, Ansett would be
in a winning situation, and I suggest that part of the slowness to change
reflects the vested interests of QF and NZ to lock Ansett out.
> In the long term, more competition would do
> Australia's airlines good, as they have to compete with people other
> than Air NZ, many of who are at the moment fitter than they are. Most
> importantly, more competition would benefit consumers, which when it
> boils down to it is much more important than short term advantages
> and disadvantages for the airlines themselves.
It would be interesting to make a comparison of how competetive Qantas and
Ansett are on world standards. Below I quote current (domestic) fares on two
trunk routes, one between two major cities, the other between a major
city and a provincal centre. Comparisons could be made if contributors
to this news group know of similar routes (ie similar distances
and populations) and fare types.
Fare type is 21 day advance purchase. Must include a Saturday night.
It has blackout dates around school holidays. This fare is the cheapest
on regular offer. (Cheaper fares when available usually have the purchase
period restricted to a week or so)
Sydney (population about 4 million) to Melbourne (population about 3 million),
distance of 707km. Return fare $AUD189.
Sydney (4 million) to Adelaide (population 1 million),
distance of 1166km. Return fare $AUD299.
Finding comparable routes is difficult. How about Toronto - Montreal
(but how is deregulation in Canada?) and San Francisco - Portland (PDX).
Keith Mason