regulators close to decision on air nz-virgin

The National Business Review
By Ellen Read and NBR staff | Tuesday December 14, 2010

UPDATED 9.41am: Virgin Blue boss John Borghetti is a surprise guest at the global meeting of Star Alliance executives taking place in Queenstown today.

The Australian airline is not a member of the Star Alliance, which includes Air New Zealand, United, Singapore Airlines and Lufthansa.

Mr Borghetti's presence was widely tipped as a precursor to a code-sharing deal with the alliance - although it may not be announced at today's meeting.

Air New Zealand chief executive Rob Fyfe told a breakfast briefing his airline was hopeful a decision would be made this week on his company's proposed transtasman route alliance with Virgin Blue.

An Air NZ-Virgin hookup would have appeal for the Star Alliance as a whole, because the group does not currently feature an Australian domestic carrier. Virgin would fill that gap.

Approval is required by the ACCC in Australia (which now includes an NZ Commerce Commission representative) and from the Minister of Transport here.

The ACCC is due to make its decision by December 20, but could announce as soon as tomorrow.

"Our fingers are crossed that we'll get approval," Mr Fyfe said.

The decision could go either way, the Air New Zealand boss said.

Air New Zealand will appeal in Australia if the ACCC decision goes against them, but the process could take six to nine months, Mr Fyfe added.

If the alliance did go ahead, it would take six months to integrate the two airlines' IT systems.

Following the breakfast briefing, Star Alliance leaders headed into a day-long board meeting.

On the agenda is a potential new member airline (there are currently 27, with four more due to join over the next 12 months.

There will also be operational talks on areas such as increasing collaborative purchasing.

Mr Fyfe confirmed he will be heading to Seattle next week to bring Air New Zealand's newest plane - a Boeing Dreamliner - home on Christmas Eve.