Air NZ accuses regulator of grandstanding on cartel claims

By Paul McBeth

Monday 15th December 2008

Air New Zealand said the Commerce Commission is "grandstanding' by announcing it will start proceedings against 13 airlines, including the national carrier, for price fixing on air freight.

"We have repeatedly asked the Commerce Commission to present us with any evidence to indicate that Air New Zealand has breached any laws," said Air New Zealand general counsel John Blair. "To date they have been either unwilling or unable to do so."

The Commission alleges the airlines, including Air New Zealand, colluded to impose fuel surcharges for more than nine years "under the auspices of the trade organisation International Air Transport Association," the commission said in a statement today.

The air freight market to and from New Zealand is estimated to be worth more than NZ$400 million annually, and total revenue over the period of the agreement is believed to be almost NZ$3 billion, the regulator said. Any airlines convicted face whichever penalty is the highest of NZ$10 million, three times the commercial gain or 10% of the group's annual turnover.

The airlines also conspired to fix prices by imposing a security surcharge immediately following the terror attacks of 2001, the regulator said.

Shares of Air New Zealand were unchanged at 84 cents today and have fallen 23% in the past three months.

Air New Zealand's Blair said the commission's announcement "is clearly an approach designed to justify their existence and seems more about grandstanding than about getting to the bottom of the allegations and facilitating a co-operative approach from the airlines."

The airline had spent "several million dollars over the past three years, analysing over a million documents and speaking to many current and former employees" in response to ongoing concerns from the commission. Blair said the commission's "disdain for engagement has made this exercise many times more expensive than it needed to be."

The investigation is part of a worldwide case that potentially involves 60 airlines, and the airlines are under similar scrutiny by other competition watchdogs including the US Department of Justice, the Australian Competition and Consumer Commission and the European Commission.

The 13 companies named are: Air NZ; British Airways Plc; Cargolux International Airlines S.A; Cathay Pacific Airways Ltd.; Emirates; PT Garuda Indonesia; Japan Airlines International Co.; Korean Airlines Co.; Malaysian Airline System Berhad Ltd.; Qantas Airways Ltd.; Singapore Airlines Cargo Pte and Singapore Airlines Ltd; Thai Airways International Public Co.; United Airlines Inc.

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