Australia's competition regular is moving to block the expanded partnership between Qantas and China Eastern.
Citing concerns over competition laws, the Australian Competition & Consumer Commission (ACCC) issued a draft determination proposing to deny authorization for both the Qantas and China Eastern – including related entities such as Jetstar – to continue coordinating operations between Australia and mainland China.
“An agreement for coordination between two key competitors may breach competition laws. The ACCC can only authorize these agreements if the public benefits from the coordination outweigh the harm to competition,” the ACCC said.
“At this stage we are not satisfied that the likely harm to competition from Qantas and China Eastern’s proposed coordination would be outweighed by any potential benefits,” ACCC Commissioner Anna Brakey said.
Both Qantas and China Eastern are seeking authorization for an Extended Joint Coordination Agreement that enables both carriers to coordinate passenger and cargo transport operations between Australia and China until the end of March 2024. In March 2023, the ACCC granted interim authorization for both carriers to coordinate their operations while the regulator assessed their application for re-authorization.
At present, China Eastern is the only airline operating flights between Sydney and Shanghai. Qantas plans to resume flights in late October.
“We are concerned that the authorization would provide Qantas and China Eastern with the opportunity and incentive to increase prices, compared to what they would charge absent the alliance, by limiting or delaying the introduction of additional capacity on the Sydney-Shanghai route as passenger demand continues to grow,” Brakey said.
“Any additional services on routes other than Sydney- Shanghai could potentially be a public benefit but we are not satisfied they are likely to eventuate between now and March 2024,” Brakey said.
“A key difference between now and the previous authorizations is we have not been provided with sufficient evidence that the coordination would lead to additional services on other routes between Australia and China.”
The ACCC added it is seeking submissions in response to the the draft determination by October 6 before it makes its final decision.