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Competition Policy for the Trans-Tasman Air Travel Market: the 2005 ACT Decision and its Implications

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  • Hazledine, Tim

Abstract

Qantas and Air New Zealand are seeking regulatory authorisation for a Tasman Networks Agreement that would in effect cartelise their trans-Tasman operations. They cite in support Reasons given by the Australian Competition Tribunal in its authorisation of their previous application to form a 'Strategic Alliance'. The ACT determined that a cartel-like arrangement between these airlines would not substantially lessen competition across the Tasman because of competition from Pacific Blue and Emirates despite the latter's very small current market share on these routes. This paper examines the ACT's reasons and finds them lacking in economic logic as well as being inconsistent with the facts of airline market competition in Australasia. The paper suggests that the ACT is not an appropriate forum for hearing civil matters such as this and proposes an alternative process based rather on the present procedures adopted by the competition commissions of Australia and New Zealand

Suggested Citation

  • Hazledine, Tim, 2006. "Competition Policy for the Trans-Tasman Air Travel Market: the 2005 ACT Decision and its Implications," Working Paper Series 18931, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    • Handle: RePEc:vuw:vuwcsr:18931
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    References listed on IDEAS

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    1. Hazledine, Tim, 2006. "Pricing and Competition in Australasian Air Travel Markets," Working Paper Series 3840, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    2. Tim Hazledine, 2004. "Application of the public benefit test to the air New Zealand/Qantas case," New Zealand Economic Papers, Taylor & Francis Journals, vol. 38(2), pages 279-298.
    3. Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(2), pages 185-199.
    4. Hazledine, Tim & Green, Hayden & Haugh, David, 2003. "The Smoking Gun? Competition and Predation in the Trans-Tasman Air Travel Market," Working Papers 191, Department of Economics, The University of Auckland.
    5. Hooper, Paul & Findlay, Christopher, 1998. "Developments in Australia’s aviation policies and current concerns," Journal of Air Transport Management, Elsevier, vol. 4(3), pages 169-176.
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