Alleged air cargo rate fixing case reaches court in New Zealand

The NZ Herald reported on court action taken by the Commerce Commission into alleged price fixing by nine international airlines serving the New Zealand market (see previous post) on:

9 May 2011 - "Airlines' price fix case starts in court"
11 May 2011 - "Air cargo cartel case opens in High Court"
12 May 2011 - "Qantas fined $6.5m for price fixing"
12 May 2011 - "Air NZ in court as price-fixing case gets under way"
13 May 2011 - "Qantas hit with record $6.5 million fine"
14 May 2011 - "Cartel case out of line, say airlines"

The Commerce Commission has made a number of media releases on the case:

20 March 2009 - "Commerce Commission procedure in accordance with standard best practice"
11 March 2011 - "Court of Appeal rules on use of confidentiality orders"
18 March 2011 - "Settlements in cartel case as Commerce Commission prepares for Court"
5 April 2011 - "$7.6 million imposed against two airlines in air cargo cartel case" - British Airways and Cargolux
20 April 2011 - "Commerce Commission narrows focus of air cargo cartel case before trial"
27 April 2011 - "Airlines' information request case resolved" - Singapore Airlines Cargo and Cathay Pacific
12 May 2011 - "Court awards highest penalty to date in price fixing" - this statement notes similar action taken in Australia, the United States, the European Union, Canada and South Korea

Air New Zealand has also issued related media statements:

18 March 2011 - in response to a Qantas media statement issued on the same day
20 April 2011

On 17 May 2010 the Australian Competition & Consumer Commission (ACCC) announced that it was taking action against Air New Zealand. On 18 May 2010 Air Transport World reported Air New Zealand's reaction.

On 11 November 2010 the NZ Herald reported that Air New Zealand had been dropped from similar action taken by the European Commission (see previous post).

LAN using MALIAT rights to code share on Cathay Pacific to Hong Kong

On 17 May 2010 the Chilean airline, LAN started code-share services to Hong Kong (HKG) from Santiago (SCL) using the operations of its oneworld global alliance partner airline, Cathay Pacific (CX) for the sector to HKG. The services are via New York (JFK), Los Angeles (LAX) and Auckland (AKL).

LAN's code sharing beyond the United States and New Zealand to Hong Kong uses Chile's air rights under the MALIAT and separately Chile's air services arrangements with Hong Kong.

South America and East Asia are on opposite side of the globe so the great circle distances involved in the three air routings are not that different, although travel via AKL is shorter:

• SCL-JFK-HKG 21,193km
• SCL-LAX-HKG 20,647km
• SCL-AKL-HKG 18,829km

The calculations were made using Great Circle Mapper.

Rob Fyfe at Greener Skies 2009

On 6 October 2009 Air New Zealand Chief Executive Rob Fyfe delivered a forthright speech that he titled "Action speaks louder than words" at the Greener Skies 2009 conference in Hong Kong in which he makes critical comments about the lack of progress in international climate change negotiations.

Media coverage of the speech appeared in the New Zealand Herald on 7 October 2009.

The unnamed airline annual report that Fyfe quotes from is that of Emirates covering 2006-2007 (see previous post).

The conference is being covered by the Air Transport Action Group (ATAG) blog Plane Talking.

Hong Kong concludes an air services agreement with Laos

On 9 September 2009 Hong Kong announced that it had signed an air services agreement with the Lao People's Democratic Republic. No details are given as to the features of the agreement but the statement notes Hong Kong's "policy of progressive liberalisation in air services between Hong Kong and our aviation partners." This is Hong Kong's sixtieth air services agreement (list).

Taiwan and China agree to "regular" flights across the Strait

On 26 April 2009 Xinhua reported on the outcome of negotiations held that day between ARATS and SEF. The new air services arrangements change the status of flights from charter (non-scheduled) to regular (scheduled) from two Taiwanese airports, increase flight frequencies from 108 to 270 per week, introduce new air routes between Taiwan and the Chinese mainland, and increase the number of mainland points that may be served by six to 27 (see previous post).

On 24 April 2009 the China Post had reported that the Taiwanese negotiators had been seeking 375 flights per week.

On 1 May 2009 the Taipei Times reported on the implications for the allocation of these rights between Taiwanese airlines.

On 14 May 2009 China Daily reported comments from Hong Kong-based Cathay Pacific (CX) on the implications of the deal for the airline.

On 15 May 2009 the Taipei Times reported that the negotiators had yet to agree to an exchange of overflight (first freedom) rights that would allow Taiwanese airlines to overfly the Chinese mainland enroute to Europe.

Fiji negotiates air services arrangements with Hong Kong

The interim Fiji Government announced on 22 April 2009 that it has signed a Confidential Memorandum of Understanding with Hong Kong. This included the initialling of an Air Services Agreement (ASA).

Air Pacific (FJ), part owned by oneworld alliance member Qantas, is now planning to commence air services between Nadi and Hong Kong in December 2009. The announcement imples that Air Pacific will look to enter into a commercial arrangements with Cathay Pacific, also a member of oneworld.

Fijilive reported on 2 April 2009 that Air Pacific is exploring the possibility of codesharing on Noumea-based Aircalin after recently ceasing operating to Japan. This would require amending the Fiji-Japan ASA to allow for third-country code share and an intermediate point in Noumea.

New Zealand Commerce Commission investigating alleged air cargo rate fixing

On 16 July 2008 the New Zealand Commerce Commission issued a media release announcing that it was filing criminal charges against Cathay Pacific Airways, Singapore Airlines Cargo and Aerolineas Argentinas. These airlines are alleged to have not provided information and documents during an investigation into allegations of price-fixing and other anti-competitive conduct in the air cargo industry.

The New Zealand Herald carried a report about this action on 16 July 2008, including comments from Cathay Pacific and Air New Zealand.

On 28 June 2008 the Herald reported on a related very large settlement reached by some international airlines with the US Justice Department described as "the highest total amount of fines ever imposed in a criminal antitrust investigation."

Hong Kong and the Philippines agree to increased air capacity

Xinhua reported on 26 June 2008 that Hong Kong SAR and the Philippines have agreed to increase capacity on air services.

On the same day there was also a press release NEW from the Philippines Department of Transportation and Communications.

Hong Kong-Japan air services arrangements reformed

A 1 February 2008 press release from the Hong Kong Government announced the removal of capacity and frequency limits for all air services by the airlines of the two parties between Hong Kong and Japan (except Tokyo).

Some airlines boosted by generous tax treatment

A 22 December 2007 article in the Australian reports on lobbying by TTF Australia (Tourism and Transport Forum) of the new Labor Government for quicker tax depreciation rates for aircraft on climate change grounds. It notes that "Australian airlines are forced to write off the value of their fleet over 10 years while Singapore has a three-year write-off period and Hong Kong can depreciate aircraft in five years."

The issue has been around for many years with Qantas, for example, making a submission that focuses on it to an Australian Government business taxation review a decade ago.

Some airlines receive even more generous tax treatment. Emirates, for example, being based in the oil rich United Arab Emirates reportedly pays no tax.

The issue of state aid to airlines and its competition implications has be of particular concern within the European Union. Does not such tax treatment raise similar concerns?

Helping to ensure that older, less efficient technology aircraft are replaced earlier may have a positive impact on reducing aviation emissions. If, however, those aircraft that are sold earlier than might be expected remain in service with other airlines in other countries the global benefit would have to be questioned. In any case the current price of Jet A1 is a powerful incentive to order new technology aircraft and this is being reflected in the record orders Boeing and Airbus have recently been enjoying.

I suspect that the tax residence of quite a few aircraft leasing companies has been driven by such tax depreciation rate considerations. In 2004 Air New Zealand was reported to be having issues with the Hong Kong tax authorities on related matters.

China and Hong Kong agree to new opportunities for their airlines

The International Herald Tribune in an Associated Press story published on 27 December 2007 details new opportunities created following air services negotiations between China and Hong Kong. Xinhua also ran a story about the new Memorandum of Understanding.

An official press release was issued by the Hong Kong Government's Transport and Housing Bureau.

Hong Kong and India expand air services opportunities

On 19 December 2007 the Indian Government announced that, following talks held in New Delhi on 17-18 December, it had reached agreement on revised air services opportunities with Hong Kong that include an expanded exchange of fifth freedom rights.

Specific mention is made in the statement of the possibility of Indian carriers code sharing with Air New Zealand via Hong Kong.

An official press release NEW was also issued by the Hong Kong Government's Transport and Housing Bureau NEW.

The Hong Kong SAR is independent from Beijing with respect to exchanging air services opportunities.

Hong Kong's Air Services Agreements available on the web

The Hong Kong SAR Department of Justice makes available the texts of Hong Kong's air services agreements here on its web site. Because Hong Kong was a British Crown Colony until the handover in July 1997, all of these agreements are relatively recent, often replacing provisions relating to Hong Kong that were included in the UK's air services agreements.

The leadership of the Hong Kong SAR delegation at air services negotiations comes from the Economic Development and Labour Bureau. Its site provides access to relevant press releases.

The relevant provisions of the 1984 Sino-British Joint Declaration spelling out Hong Kong SAR's degree of autonomy with respect to air services agreements are available here UPDATED (see Chapter IX of the Annex of the Joint Declaration).