Watchdog knocks back Air Canada-ANZ proposal
CANBERRA – AIR Canada has threatened to cut services on its Sydney-Vancouver route after Australia’s competition watchdog rejected as anti-competitive a proposal to co-operate with Air New Zealand on trans-Pacific flights.
The airlines had applied to share revenue on Air Canada’s non-stop Sydney-Vancouver flight and Air NZ’s direct Auckland-Vancouver service.
The Australian Competition and Consumer Commission said it was concerned it would reduce competition between Air NZ’s indirect flights and Air Canada’s direct flight from Sydney.
Air NZ and Air Canada had argued there may not be enough demand to support daily year-round services on the routes without the deal.
Air Canada also warned that rejection of the deal “would almost certainly result in decreased frequency of flights between Sydney and Vancouver”.
The ACCC noted that about 80 per cent of traffic on the route came from leisure passengers or visiting friends and relatives who were prepared to take cheaper, indirect options if they were available.
It said the agreement was likely to reduce to the incentive for Air NZ to price its indirect service to North America to compete aggressively with Air Canada’s direct service.
ACCC chairman Graeme Samuel said the commission accepted that the direct flights delivered benefits such as increased choice and convenience for passengers.
But it was not convinced that an anti-competitive agreement was required to operate the flights, which had been running since late 2007, or about how the revenue-sharing and joint marketing would actually address a fall in overall demand.
Source: The Australian
Ian Jarrett
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