Air reforms grounded

A pact between prime ministers to overhaul travel between Australia and New Zealand is in jeopardy, writes Clive Dorman.

Last year's federal election and the change of Australian prime minister appear to have derailed attempts by the airline industry to reform travel between Australia and New Zealand with the promise of cheaper airfares.

In 2009, the airlines won crucial political support for the reform of Tasman air services when the New Zealand Prime Minister,

John Key, and the then-Australian prime minister, Kevin Rudd, personally undertook to drive the process.

There had been talk that the introduction of simplified border procedures, which would in effect turn Tasman air routes into domestic routes, would begin on services to and from Auckland late in 2009. But that deadline passed without action.

The airlines fear that since the coup against Rudd, the wheels have fallen off the reforms they first sought in the early 1990s.

The airlines remain optimistic the reforms can continue but there is still a long way to go, an airline industry source says. "Since former PM Rudd and PM Key got together, the change of Australian PM may have slowed the optics of the process or the approach within the Australian government but agencies are engaged and working towards an improved outcome," the source says.

However, it has emerged that the reforms - championed by the chief executive of the

Jetstar group, Bruce Buchanan - are not enthusiastically supported by the rest of the airline industry.

The Virgin Blue group is now preoccupied with its alliance on Tasman routes with Air New Zealand, which the Australian Competition and Consumer Commission approved in mid-December, after earlier opposing it.

Virgin Blue's new group chief executive, John Borghetti, says that while he still generally supports the reforms, he's more worried about whether the sudden introduction of domestic flying across the Tasman would create "infrastructure bottlenecks".

Virgin Blue is already using all its domestic gates at airports such as Sydney and Melbourne, Borghetti says.

"I have nothing against the idea of what you may call borderless transportation between Australia and New Zealand," he says.

"The issue I have is infrastructure … It's fine for someone like Jetstar or Qantas, who have got their own terminals and can allocate an extra pier or an extra gate [for new services].

"In Sydney and Melbourne, [domestic] airport gates are limited, so for us to move aircraft out of the international terminal into the domestic terminal, it's just not practical."

However, being able to fly between domestic terminals across the Tasman is crucial to Buchanan's forecast that airfares can be reduced by about 30 per cent as a result of the removal of some costs, such as Australia's $47 departure tax and the high gate fees charged by the international terminals.

Buchanan says a simplified system would save the airline industry more than $234 million a year in costs and would benefit both countries.