Australian regulators plan to refuse codeshare deal between Qantas and Japan Airlines

The Australian Competition & Consumer Commission (ACCC) on Thursday said they are proposing to deny authorization for Qantas and Japan Airlines to codeshare flights between Australia and Japan. According to the Australian regulator, this business agreement would allow Qantas and Japan Airlines to coordinate on ticket pricing, flight schedules and marketing, which could mean higher fares for flights between Australia and Japan.

The ACCC Chair, Rod Sims outlined that such an agreement for coordination between two key competitors breaches competition laws and can only be authorized only if the public benefits from the cooperation outweigh the harm to competition.

In a statement seen by AeroNewsX, the ACCC Chair, Rod Sims said “Granting this authorization would seem to eliminate any prospect of Qantas and Japan Airlines competing for passengers travelling between Australia and Japan, as they did before the COVID-19 pandemic. This elimination of competitors would benefit the airlines at the expense of consumers”

“At this stage, we do not consider that Qantas and Japan Airlines’ proposal passes that test,” he added, noting that before the COVID-19 pandemic, Qantas and Japan Airlines were the only two airlines offering direct flights between Melbourne and Tokyo. Apart from Qantas and Japan Airlines, All Nippon Airways is also offering flights on the Sydney to Tokyo route.

ACCC said such coordination would appear to undermine competition significantly by reducing the prospect of a strong return to competition on the Melbourne-Tokyo and Sydney-Tokyo routes when international travel resumes. The competition regulator noted that there may be some short term benefits from this agreement, but added that its current view is that it would short term benefits “are outweighed by the severe harm to competition.”

The international airline and tourism industry has been severely affected by the COVID-19 pandemic. As international travel restrictions gradually ease, protecting competition in the airline industry is critical to ensuring recovery in the tourism sector. The ACCC concluded by stating that it still seeking submissions from interested parties in response to this draft determination by May 27 and will make a final decision after considering those submissions.

Following the Australian regulator’s draft decision, Qantas said they were disappointed with the negative draft outcome and it would respond to the ACCC’s concerns to help convince the regulator of the deal’s merits before it makes a final decision. Japan Airlines added that they will continue to work with Qantas to determine the best course of action to gain ACCC’s approval for their proposed joint venture.

Back in 2015, the Australian Competition & Consumer Commission proposed initially to deny a similar joint venture between Qantas and China Eastern Airlines due to concerns over fares on the Sydney-Shanghai route, but it was later approved.

Source: https://aeronewsx.com/australian-regulators-plan-to-refuse-codeshare-deal-between-qantas-and-japan-airlines/?utm_source=rss&utm_medium=rss&utm_campaign=australian-regulators-plan-to-refuse-codeshare-deal-between-qantas-and-japan-airlines