ACCC says ‘no’ to Qantas and China Eastern partnership extension

Qantas has been knocked back on its request to coordinate operations with China Eastern Airlines after the ACCC issued a draft determination this morning denying authorisation for the request.

The two carriers were seeking permission on an Extended Joint Coordination Agreement, which would enable them and their related entities, including Jetstar, to coordinate passenger and cargo transport operations between Australia and China until the end of March 2024.

The consumer watchdog said the alliance would potentially breach competition laws, giving Qantas and China Eastern the “opportunity and incentive to increase prices… by limiting or delaying the introduction of additional capacity on the Sydney-Shanghai route as pax demand continues to grow”.

“At this stage we are not satisfied that the likely harm to competition from Qantas and China Eastern’s proposed coordination would be outweighed by any potential benefits,” ACCC Commissioner Anna Brakey said.

“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,” Ms Brakey said.

It pointed out that China Eastern is currently the only airline flying direct between Sydney and Shanghai, with Qantas resuming flights in late October, and that demand for air travel between Australia and China is likely to keep growing between now and the end of March 2024.

The ACCC previously authorised the alliance in 2015 with conditions and in 2021 without conditions due to the exceptional circumstances related to the COVID-19 pandemic, and its associated effects on travel.

On 30 March 2023, the ACCC granted interim authorisation to enable Qantas and China Eastern to continue to coordinate their operations while the ACCC assesses their substantive application for re-authorisation.

That interim authorisation remains in place and Qantas and China Eastern have been invited to make submissions on a transition to end authorisation.

The ACCC is seeking submissions in response to the draft determination by 6 October 2023, before making its final decision.

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