Indian government looks to tighten capacity through force
3rd January 2012
The ACCC has issued a draft determination proposing to deny authorisation for Qantas Airways and China Eastern Airlines Corporation and their related entities (including Jetstar) to continue coordinating operations between Australia and mainland China.
Qantas and China Eastern are seeking authorisation for an Extended Joint Coordination Agreement that enables them to coordinate passenger and cargo transport operations between Australia and China until the end of March 2024.
An agreement for coordination between two key competitors may breach competition laws, says ACCC. The ACCC can only authorise these agreements if the public benefits from the coordination outweigh the harm to competitio
“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.
Currently China Eastern is the only airline flying direct between Sydney and Shanghai with Qantas planning to resume flights in late October.
“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.
The ACCC considers that demand for air travel between Australia and China is likely to keep growing between now and the end of March 2024, as Chinese tour groups return and following Tourism Australia's recent campaign in China promoting Australia.
“Any additional services on routes other than Sydney- Shanghai could potentially be a public benefit but we are not satisfied they are likely to eventuate between now and March 2024,” Ms Brakey 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.”
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.