May 4, 2010 12:00pm by David Farrar

Air NZ and Virgin

Air New Zealand chief executive Rob Fyfe has warned that Jetstar and Qantas could soon dominate the trans-Tasman market if Air New Zealand’s new alliance with Virgin Blue is rejected by competition authorities.

I love Air New Zealand and think they are a great airline, but I do wish they would spend less time trying to reduce competition on the trans-Tasman routes.

This must be the third or fourth time I’ve heard they cry that Air New Zealand is doomed unless it does a deal on the trans-Tasman route, and regulators turn them down, and what do you know they continue to be very profitable.

Average airfares across the Tasman could fall between 10 per cent and 20 per cent as a result of the planned alliance Mr Fyfe said.

Yes, reducing competition of course leads to cheaper airfares. Not.

Mr Fyfe said unlike Air NZ’s attempted tie-up with Qantas, which would leave one player with three-quarters of the market, a deal with Virgin would create a player with around 56 per cent share.

And this is not so bad, as the proposed Qantas deal. However I prefer three way competition, rather than a duopoly.