Airlines’ merger

Press, 21 October 1983, Page 20

Airlines’ merger

Sir, — I was of the opinion that the Examiner of Trade Practices was obliged to, in particular, have regard to the question of the creation of a monopoly, in any one industry. Quite clearly the merger of Air New Zealand and Mount Cook Airlines will in all fairness effectively mean a monopoly in the commercial airlines in New Zealand. My further concern is that this monopoly will be another State-controlled operation. Surely this is contrary to the so-called free-enterprise Government philosophy. I would appreciate an answer from the Examiner and also the appropriate Minister. — Yours, etc.,

B. J. WILKS. October 6, 1983.

[The Minister of Civil Aviation, Mr Gair, replies: “The Government was consulted about the proposed purchase and gave its approval. The Government has not been directly involved in the discussions, however, and the details of the future relationship between the two companies will be for them to determine, subject to the approval of the Examiner of Commercial Practices. I do not see the proposal being inconsistent with the Government’s measures to promote greater efficiency and economy throughout

the transport industry. Mt Cook and Air New Zealand are not in competition with each other, but provide complementary air services. Moreover, it is my understanding that under the arrangements being considered by the two companies, Mt Cook would retain its separate identity and independence of operations. Tourism has a major part to play in the development' of our economy. It is also one of the most highly competitive areas of international economic activity. In the face of that tough competition, we have to make an expanded effort to promote in-bound tourism to New Zealand. This requires more sophisticated marketing of our tourist attractions and there is a role here for both the public and private sectors. It is not a question of one sector assuming dominance at the expense of the other, but of achieving a more effective use of the resources and experience each sector has to offer.”]

[The Examiner of Commercial Practices, Mr P. E. Donovan, replies: “The aspect of creation of a monopoly is only one of a number of factors for consideration under the public interest criteria of the Commerce Act, 1975. In my assessment of the merits of the proposal of Air New Zealand to acquire additional shares in Mount Cook Airlines, your correspondent may be assured that the point raised will be fully considered.”]