Tuesday, September 26, 2006

Airline Services Agreement

I'll admit to being terribly surprised today at finding out that the third largest provider of trans-tasman flight services is effectively bound by a non-competition agreement.

Emirates, which provides around 12% of the trans-tasman flight capacity is bound in its Airline Services Agreement (which allows it to fly to New Zealand) to not materially affect the interests of New Zealand's national carrier (IE Air New Zealand). Most worrying however (given that a number of old bi-lateral airline services agreements apparently contain these clauses - that was an eye opener) is that New Zealand officials have recently sent communications to Emirates reminding them of this obligation.

If any one can find the reference to this - I believe it was actually Phil Goff from whom this missive was sent; at which point given this Governments posturing over increasing competition giving it the right to effectively confiscate private property, Labour really needs to explain why it is enforcing anti-competitive practices just because it has a shareholding in another enterprise.

I recently opined on how the Labour Government was continuing its march towards ensuring the utopian Socialist collective hidden beneath the veneer of capitalist endeavor (catch-22). It would seem that it wasn't far wrong.
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6 comments:

burt said...

OK if you are one of the chosen few eh! Intervention and control are the only tools the socialist believe in.

Didn't the King of Tonga also do something like this, IE: Keep the cost of internationla travel on his own airline artifically high to ensure a good PR result for the tax payer money 'stolen' ooops, invested into it.

Always thoughtb we were a pacific backwater, but I didn't realise we aspired to be that 'backwater'....

iiq374 said...

I keep wanting to believe that posts like this are just hyperbole and scaremongering - but the Government just keeps trying to prove that there is cause for concern...

Sean (Lawyer in SIN) said...

Hi IIQ

Found your blog! I've posted over @ Rodney's why this action is nothing to do with the Labour government and everything to do with how the interntational aviation regime works. New Zealand actually has a liberal policy on aviation economic regulation, but the nature of the system actually punishes those that liberalise too far ahead of others. Essentially, EK takes advantage of the traffic rights it has that Air NZ doesn't have and probably can't get under a system where rights are traded. Until all major aviation economies sign a liberal multilateral agreement this will continue. Singapore, e.g., is hit by this as well: it granted rights to Australia allowing QF to carry traffic SIN - LON; but the Australians won't give rights to SQ to operate SYD - LAX.

iiq374 said...

Lawyer in SIN / Sean:
Thanks for the visit, although I'm not sure I ever lost it...

I've posted my replies back at Rodneys (as at least they're in context there).

The liberalisation issue is one that isn't exactly unique to aviation, just ask our Farmers... However I don't see that as a good reason to proactively defend trade barriers as per the MOT actions.

Sean (Lawyer in SIN) said...

iiq: Now this is the real reason why its bad for Labour to own an airline: from today's Herald:

"Labour-affiliated unions put pressure on Government ministers at Labour's conference at the weekend to give the airline a directive to ditch its plans.

Alternatively they said the Government, which owns 80 per cent of the airline, should buy the remaining shares so it could exert greater control."

If you think things are bad now, wait until the unions run an airline (you only have to look at the old Air France, the old Olympic, United etc etc etc)!

iiq374 said...

Sean - I agree; however I would also say that this is really just an extension of what I was highlighting in the original post - that the moment the NZ Government changes from being a pure market facilitator to a participant then its vested interests create these types of conflicts and results.