Ill-fated Air New Zealand -Qantas merger proposal - and Concorde visits New Zealand

Unfortunately there is no date for this article by David Stone from the Independent (NZ) around 2002, which is about the ill-fated proposal, initiated by Qantas, to invest in Air New Zealand, after the latter had been rescued by the New Zealand Government following the collapse of Ansett Australia.  The story behind this is long and not for this post, but in effect it went like this:

• Ansett having collapsed and the New Zealand Government letting its own indecision about foreign investment in Air New Zealand mean it had to buy the airline out to protect its New Zealand based operations, Qantas saw a rare opportunity to kneecap any chance of Air New Zealand flying domestically in Australia.
• Qantas had long sought to tie up the markets of both countries, including the Tasman, into a single venture, facing fairly limited competition (especially with the collapse of Ansett, Qantas figured it could tolerate Virgin Blue as it was then as proving it had competition, alongside foreign carriers).
• Qantas initiated the idea of investing in Air NZ to ensure it wouldn't fall into the hands of a rival, it was called a commercial and equity "alliance", and would have sewn up most of the two markets into one major carrier.

The article stems from the submission of the airline to the Commerce Commission (and ACCC) about the claimed public benefits of the "efficiencies".  Then NZ Finance Minister, Michael Cullen is quoted in the article about wanting to ensure Air NZ retained operational autonomy and wouldn't be subsumed within Qantas (critical in being able to exercise landing rights in some countries, as Air NZ still had to be seen as a NZ carrier). 

Curiously the submission included what were called a "factual" and a "counterfactual" both of which were highly controversial. The "factual" was the claimed public benefit of efficiencies of what was essentially a substantial lessening of competition (which ultimately saw the Commerce Commission rule against the deal).  It is difficult to see how there would be public benefit in the greatest rivals on the Tasman essentially co-ordinating and not competing in supplying capacity (or issuing fares), and also the withdrawal of Qantas from the New Zealand domestic market.  The "counterfactual" was what was declared would happen if the deal did not proceed, and of course as it did not, it is fairly clear now that this was false. The "counterfactual" is seen by the writer as essentially Qantas threatening a "war of attrition", which Qantas would win because Air NZ could not compete against its scale.  In short, Qantas was threatening "merge or we will defeat you" rather than a benign "let's merge for our mutual benefit".   It also puts paid to the idea that Air NZ would retain autonomy, if Qantas was threatening "co-ordinate with us or we will defeat you".

In the end as it didn't happen, there was not a "war of attrition". In Australia, Virgin Blue expanded and became Virgin Australia, filling the gap left by the collapse of Qantas. On the Tasman, Air NZ and Qantas compete vigorously, and domestically in NZ, Qantas remained although it handed off services to Jetstar retaining a fairly small scale operation.  Qantas signed up with Emirates and formed a joint venture which also serves New Zealand, whereas Air NZ was for years in partnership with Virgin Australia (including partial ownership) before abandoning it, and forming a small scale alliance with Qantas on each others' domestic services only.  

We can be grateful that the desire by Michael Cullen (and the Clark Government) for even entertaining this merger was tempered by the Commerce Commission making it very clear that it would have been bad for consumers.

The full page advertisement in the Evening Post on 26 October 1985 of a BA Concorde visiting New Zealand was promoting an opportunity to fly on the aircraft on 6 April 1986 requesting people phone a number or drop off a business card to the consultant in Palmerston North. It offered a five course dinner while taking the flight, for one hundred people.