Fare rises not collusion

Press, 29 September 1988, Page 8

Fare rises not collusion

PA Wellington The Commerce Commission has no reason to suspect collusion between Air New . Zealand and Ansett over their 12 per cent price rises announced this week, says the commission’s chairman, Mr John Collinge. Ansett announced on Monday it would increase its fares 12 per cent on Tuesday — the day Air New Zealand revealed it would raise its prices 12 per cent on flights be-

tween Auckland, Wellington and Christchurch. Ansett flies only these routes. Mount Cook Airline (79 per cent owned by Air New Zealand) yesterday also announced a 12 per cent increase in its fares from midnight last night. Mr Collinge said yesterday it appeared one party decided to increase its fares, then the other independently followed suit. Air New Zealand and Ansett have been involved in a price war since the

Australian airline began competing against the national airline on domestic flights last year with the same basic fares as Air New Zealand. The two airlines continue to compete strongly with discount fares. Ansett’s chief executive, Mr John Buchanan, said the price increase was needed because of rising costs — the same reason given by Air New Zealand yesterday. An Air New Zealand spokesman said it made

commercial sense to follow Ansett’s lead. He said the airline had been considering an increase and the Ansett announcement was deemed to be an opportune time to do so from a marketing and commercial perspective. In recent times the airline’s fares had been unrealistically low, he said. Overseas domestic airlines often have similar fares as costs do not greatly vary among competitors.