Draft ACCC ruling reversed as QF-MU pact to proceed.
Qantas and China Eastern Airlines will be permitted to coordinate their operations between Australia and China, with the Australian Competition and Consumer Commission having just announced its approval of the carriers’ Joint Coordination Agreement.
It’s a backflip from the March draft determination which proposed denying authorisation to the alliance, with the ACCC today saying that “since then Qantas and China Eastern have provided significant commitments to add additional frequencies and destinations between Australia and China if the alliance is authorised”.
According to an ACCC statement just issued, as well as increased peak period MU frequencies from Shangai to Sydney, Melbourne and Cairns, the Chinese carrier plans to introduce year-round services on a new route, “the details of which were provided to the ACCC confidentially”.
Co-location of Qantas with China Eastern at Shanghai Pudong International Airport will also help establish a gateway for connecting services through Australia and China.
“The ACCC considers that the addition of a significant number of new services, and expanded range of destinations, reflecting this gateway strategy, would constitute a significant public benefit,” said ACCC chairman Rod Sims.
The ACCC has imposed conditions on the authorisation which require Qantas and China Eastern to grow their capacity on routes between Australia and Shanghai by 21% over the five year term of the authorisation. The airlines will also be required to report their average fares on a monthly basis on each route between Australia and China, with the ACCC concerned that competition on the direct Sydney-Shanghai point to point route will be greatly reduced under the alliance, giving the carriers the opportunity to increase prices.
More details in today’s issue of Travel Daily.