Competition Watchdog Could Sever Qantas-China Eastern Airlines Partnership

Competition Watchdog Could Sever Qantas-China Eastern Airlines Partnership - The Australian Competition and Consumer Commission (ACCC) could refuse to authorise Qantas and China Eastern Airlines to continue an ongoing codeshare agreement over fears it could impact fares.

Competition Watchdog Could Sever Qantas-China Eastern Airlines Partnership

Competition Watchdog Could Sever Qantas-China Eastern Airlines Partnership

The Australian Competition and Consumer Commission (ACCC) could refuse to authorise Qantas and China Eastern Airlines to continue an ongoing codeshare agreement over fears it could impact fares.

The two airlines are seeking to extend their joint coordination agreement to coordinate cargo and passenger transport operations between Australia and China until the end of March 2024.

"We are concerned that the authorisation would provide Qantas and China Eastern with the opportunity and incentive to increase prices, compared to what they would charge absent the alliance, by limiting or delaying the introduction of additional capacity on the Sydney-Shanghai route as passenger demand continues to grow," ACCC Commissioner Anna Brakey said on Sept. 15.

The consumer watchdog noted that demand for air travel between Australia and China is expected to grow as Chinese tour groups return to the land down under, following Tourism Australia's campaign in the Asian country.

Currently, China Eastern is the sole air carrier offering direct flights between Sydney and Shanghai, while Qantas plans to resume flights in late October.

"Any additional services on routes other than Sydney to Shanghai could potentially be a public benefit but we are not satisfied they are likely to eventuate between now and March 2024," the commissioner said.

"A key difference between now and the previous authorisations is we have not been provided with sufficient evidence that the coordination would lead to additional services on other routes between Australia and China."

The ACCC granted the two air transport companies an interim authorisation last March 30, allowing them to coordinate their operations while the watchdog evaluated their application for re-authorisation.

The ACCC said that it would only authorise the partnership if it could bring more good than harm to the public. The interim authorisation is still in force and the two airlines have been invited to make submissions on the possible termination of their agreement.

A Qantas spokesperson said that the flag carrier will review the draft decision and address the matter before a final decision comes out.

The ACCC's announcement comes as Qantas faces pressure on multiple fronts.

The Labor government has faced scrutiny for blocking a request by Qatar Airways to add more flights into Australia with accusations it is protecting Qantas from competition.
Further, the national carrier is fighting an action from the ACCC alleging it engaged in deceptive advertising with hundreds of millions in fines being threatened, while earlier this week, the airline lost a High Court case regarding its sacking of 1,700 workers during the COVID-19 pandemic.

Qantas is now operating under its new CEO Vanessa Hudson, succeeding Alan Joyce who decided to step down amid the spate of issues.

"This transition comes at what is obviously a challenging time for Qantas and its people. We have an important job to do in restoring the public’s confidence in the kind of company we are, and that’s what the Board is focused on, and what the management under Vanessa's leadership will do," Qantas Chairman Richard Goyder said.

The Liberal Party has called out Qantas, saying that the airline should focus on delivering high-quality service to its customers instead of other matters outside its remit.

"Qantas should spend less time focusing its efforts on getting the Albanese government to block its competitors and helping them run joint political campaigns. Their focus should be squarely on running a high-quality airline," Shadow Minister for Employment and Workplace Relations Michaelia Cash said.