Cathay Pacific and Qantas’s bid for a new codeshare agreement was rejected by Australian aviation regulators.

In a ruling published on May 24, Australia’s International Air Services Commission (IASC) cited the proposed codeshare agreement between OneWorld partner airlines Cathay Pacific and Qantas would likely “entrench and expand the market position of Qantas and Cathay Pacific, to the detriment of Virgin Australia’s competitive position and the position of any potential future entrants on the route.”

The IASC added that competition would be weakened, which would lead to an increase in fares and/or the reduction of benefits to travelers stating: “The Commission finds that the likely public benefits of the variation are substantially outweighed by the likely public detriment that would follow from the proposed aviation.”

As part of the proposed agreement, Qantas would add its QF flight code on Cathay Pacific/Cathay Dragon operated flights to/from Hong Kong, while the Hong Kong-based airline would add its CX code on flights to 25 destinations within Australia operated by Qantas.

The bid was opposed by Virgin Australia, which competes with Cathay Pacific and Qantas with its own flights from Melbourne and Sydney to Hong Kong.

Of the three carriers (Virgin Australia, Cathay Pacific, and Qantas), Cathay Pacific has the most routes between Australia and Hong Kong operating flights to Adelaide, Brisbane, Cairns, Melbourne, Perth and Sydney. Earlier this month, Cathay Pacific announced it would suspend its flights to Cairns.

Qantas operates flights from Brisbane, Melbourne, and Sydney to Hong Kong.

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