Airline cooperation agreements

International aviation is governed by a network of thousands of bilateral air services agreements that set out the routes and capacity that airlines can operate between any two countries. Airline cooperation agreements are a common feature of international aviation but require authorisation as they might otherwise breach competition law, and to ensure the benefits to the public outweigh the risk of lessening competition. Airlines can enter into cooperation agreements with one another and agree to cooperate on aspects of pricing, scheduling and service delivery in a particular market. Examples include alliances and codeshares:

·       An alliance is an extensive commercial arrangement in which two or more airlines agree to cooperate on various aspects of pricing, scheduling, operations and service delivery in a particular market.

·       A codeshare agreement is a business arrangement between two or more airlines who want to advertise the same flight involving New Zealand destinations, but under their own airline names and flight numbers.

The Civil Aviation Act 2023 allows for authorisation of cooperation agreements, that involve New Zealand destinations. An agreement, once authorised by the Minister, enables airlines to cooperate on various aspects of their operations without breaching competition laws.

The Minister may grant authorisation if the Minister is satisfied that:

·       granting the authorisation will contribute to the main purpose or any of the additional purposes of the Civil Aviation Act; and

·       giving effect to the agreement would result, or be likely to result, in a benefit to the public that would outweigh any lessening in competition.

When authorising the Minister must specify the duration of the authorisation and any conditions that apply to the authorisation.

The Minister when considering granting or declining an application, must publicly notify their proposed decision and allow for written submissions on the proposed decision.

Airlines can apply for the airline cooperation agreements to be reauthorised before the current authorisation expires.