Airlines call foreign exchange plan unfair

Press, 25 November 1981, Page 1

Airlines call foreign exchange plan unfair

By

LES BLOXHAM,

travel editor

International airlines serving New Zealand are concerned that the , Labour, Party's plan for a surcharge on foreign exchange would breach existing bilateral aviation agreements. Labour has said that if elected to power on Saturday it would impose a 6 per cent surcharge on all foreign-ex-change transactions. This would mean that international airlines would pay an additional 6 per cent to remit revenue from tickets sold in New Zealand to their home countries. The scheme would favour Air New Zealand because most of the revenue it gathers from ticket sales in New Zealand remains here. The foreign airlines were particularly upset by the contents of a telegram sent by. Labour's member of Parliament for Western Hutt.

Mr J. J. Terris, in answer to a constituent’s question on the surcharge. Part of the text was released by the leader of the Labour Party (Mr Rowling) on Monday. "Regarding your query . . . I confirm no penalty arises if tickets are purchased on Air . New Zealand flights,” Mr Terris said in the telegram. One newspaper reported Mr Rowling as saying, in elaboration, that the penalty would not be imposed if New Zealand currency was used to pay for tickets' on Air New Zealand. Travel on any other airline would be subject to the surcharge, Mr Rowling said. Foreign airlines, including Pan American, Qantas, British Airways, and Singapore Airlines, were not amused: such action would be discriminatory and a breach of their bilateral agreements, they said. Furthermore, the implication that Air New Zealand woujd be able to sell international tickets 6 per cent cheaper than the foreign airlines could be interpreted as an “incentive” and therefore in breach of the Government’s International Air Tariff Regulations, 1978.

“The Press” asked Mr Rowling to comment. He said that it was not Labour's intention to have a 6 per cent differential between Air New Zealand's fares and those sold by other .airlines. But he confirmed that the foreign-owned airlines would have to pay the surcharge on any revenue they remitted overseas, just as Air New Zealand would on any of its foreign payments. Mr Rowling agreed that this could work to the advantage of Air New Zealand. To a suggestion that the foreign airlines would probably be reluctant to pass on the cost to the public, Mr Rowling said, “I wouldn’t be too sure about that . . .” Pan American’s New Zealand manager, Mr David Morgan, said yesterday that Labour’s plan would be discriminatory and therefore a violation of the bilateral agreement on aviatiori rights between the United States and New Zealand. “It is a policy fraught with international difficulties in that it would impose an unfair burden on overseas carriers," he said. "It should be remembered that Air New Zealand earns

substantial funds in the United States which it can remit back to New Zealand without penalty. “Mr Rowling surely cannot be serious about this. It would certainly raise an outcry and probably retaliation by the United States Government.”

MHMorgan said that Pan American retained in New Zealand a percentage of its locally earned revenue to meet its New Zealand expenses. The balance was remitted to the airline's headquarters in New York.

Mrs Sandra McKechnie. commenting on behalf of British Airways, said that such a proposal would be “quite untenable.”

Spokesmen for Qantas and Singapore Airlines also agreed that the surcharge would be discriminatory.

Mr R. Porter, New Zealand manager of Qantas, said that Air New Zealand would be able to remit home all its Australian earnings without penalty.

Mr' W. W. L. Clague, New Zealand manager of Continental Airlines, could not be reached for comment.