Air NZ-Qantas deal could cost Origin dearly - report

By NZPA

Tuesday 10th December 2002

Provincial airline Origin Pacific could lose more than a quarter of its market share if a partnership between Air New Zealand and Qantas is approved.

A report commissioned by the two big airlines notes that "the alliance will have some impact on provincial city-pair routes within New Zealand, especially on Origin Pacific".

Origin, which began as a charter carrier in 1997, now offers scheduled passenger and dedicated freight services and has greatly expanded since the demise of Qantas New Zealand.

The Nelson-based airline codeshares with Qantas, which moved in to help fill the void left when Qantas NZ collapsed.

The report, by Australian firm Network Economics Consulting Group (NECG), says 28 percent of Origin's passengers over the 12-month period to July this year were linked to a Qantas flight.

With the proposed new alliance, Qantas may no longer codeshare on these routes, the report says.

This could potentially affect Origin's prices and end its access to an automatic market share from connecting traffic.

"While this may not lead to the loss of all passengers that would otherwise have been passed from Qantas to Origin Pacific, the majority of this traffic must be regarded as being significantly less certain under the alliance," NECG says.

Origin's ability to expand might also be hurt and "indeed might even lead to some contraction".

But Origin Pacific's managing director Robert Inglis recently said the arrangement with Qantas was incremental.

"The arrangement we have had since the failure of Qantas New Zealand has always been a short-life arrangement."

However, he acknowledged the airline's arrangement as a codeshare operator with the Australian carrier would be affected by the eventual outcome.

Mr Inglis said Origin's feeder deal with Qantas had never been meant to exclude it from working with any other carrier and if other opportunities came up, he would look at them.

"A major airline is not the panacea for all the ills of a regional airline," he said.

Qantas is seeking permission on both sides of the Tasman to spend $550 million on a 22.5 percent stake in Air NZ. The Australian airline would continue domestic services here, but they would be managed by the Kiwi carrier.

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