Competition Commission blocks Qantas-China Eastern deal

The Australian Competition and Consumer Commission (ACCC) is proposing to deny authorisation for Qantas and China Eastern to coordinate their operations between Australia and China under a proposed Joint Coordination Agreement.
In an official statement, the ACCC said it considered the agreement was likely to result in significant public detriment by giving Qantas and China Eastern increased ability and incentive to limit capacity and/or increase airfares on the Sydney – Shanghai route.
ACCC chairman Rod Sims said, “The ACCC understands Qantas’ desire to form an alliance with a Chinese airline to establish a gateway to North East Asia. However, the ACCC’s concern is that they have chosen to do so with their main competitor on the one route between Australia and China on which Qantas operates direct flights.
“Qantas and China Eastern together account for more than 80 per cent of capacity on direct services on the Sydney – Shanghai route. They are the two major airlines on the route and the only airlines offering daily flights, and so the major competitive constraint on each other. Competition between them will be greatly reduced under the proposed Agreement.”
The Sydney – Shanghai route accounts for around 24% of all direct flights between China and Australia.
*… and untangling that little bombshell may be an early challenge for ex-Qantas boss Andrew Hogg whose appointment to the role of Tourism Australia’s Regional General Manager Greater China, based in Shanghai, was announced this week.
“Andrew has a deep knowledge of the market and is well connected in the region, both commercially and politically,” said Tourism Australia Managing Director, John O’Sullivan.

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