Key Points:

  • The Australian Competition and Consumer Commission (ACCC) raises concerns that the ongoing collaboration between Qantas and China Eastern Airlines could violate competition laws, leading to higher prices for travelers.

  • Despite the alliance's facilitation of coordinated flight schedules and customer benefits since 2015, the ACCC cites inadequate evidence of potential advantages in the current landscape to justify the partnership's extension to March 2024.

  • Following a series of scrutinies, including a recent lawsuit against Qantas, the ACCC plans to reach a final decision regarding the alliance by October 6, maintaining an interim authorization for now.

Australia's Watchdog Questions Qantas and China Eastern Airlines' Agreement Renewal

SYDNEY — The Australian Competition and Consumer Commission (ACCC) is contemplating putting an end to the alliance between Qantas and China Eastern Airlines, foreseeing that its continuation might impose inflated prices on travelers. The collaboration initially approved with stipulations in 2015 and subsequently renewed in 2021, sans conditions due to the pandemic, facilitates coordinated operations between Australia and China.

Notwithstanding the exceptional circumstances invoked during the pandemic, the ACCC is currently wary of renewing the alliance till March 2024, as tourism flux between the countries augments, and China Eastern remains the solo operator of direct flights between Sydney and Shanghai. ACCC Commissioner Anna Brakey expressed discontent, citing the substantial probability of the agreement impeding competition while failing to guarantee public advantages.

Brakey emphasized the altered dynamics of the travel sector since the past approvals, underlining the absence of concrete evidence substantiating the advent of augmented services on various Australia-China routes. The concerns orbit around the potential of the alliance to exploit the exclusivity on the Sydney-Shanghai corridor, consequently escalating prices and restricting the influx of additional capacity prompted by swelling passenger demand.

Qantas, on its part, highlighted the considerable benefits accrued to a plethora of customers since the inception of the partnership in 2015, acknowledging the considerable boost it offered to the tourism sector through harmonized flight timetables and streamlined customer services. Despite the ACCC's skepticism, the airline expressed its readiness to scrutinize the provisional decision meticulously and to strive to alleviate the apprehensions ahead of the conclusive ruling, which is slated for release on October 6.

The interim permission granted to the airlines to persist with their cooperative venture in March retains its validity for the foreseeable future. This regulatory stumble occurs a fortnight post ACCC's legal action against Qantas over accusations of merchandising seats on pre-cancelled flights, a litigation that could potentially saddle the airline with a landmark penalty of $600 million if adjudged guilty.