Invest
ACCC steps in on Qantas-Japan Airlines partnership
Australia’s competition authority says that the short-term benefits of a new partnership between Qantas and Japan Airlines don’t outweigh the long-term costs to competition in the sector.
ACCC steps in on Qantas-Japan Airlines partnership
Australia’s competition authority says that the short-term benefits of a new partnership between Qantas and Japan Airlines don’t outweigh the long-term costs to competition in the sector.
The Australian Competition and Consumer Commission has put the kibosh on a new business agreement between Qantas and Japan Airlines.
“The ACCC can only authorise an agreement between competitors if it is satisfied the public benefits would outweigh the harm to competition. The alliance did not pass this test,” ACCC chair Rod Sims said.
The partnership would have seen the two airlines co-ordinate flights between Australia and Japan.
In its decision on the matter, the ACCC raised concerns that it would have allowed both airlines to stop competing on all aspects of price and service for approximately three years.
Prior to the pandemic, the ACCC noted that Qantas and Japan Airlines accounted for approximately 85 per cent of passengers travelling between Australia and Japan.
While the regulator acknowledged the ongoing impacts on the aviation industry, they said that the benefits of long-term competition outweighed any short-term benefits the partnership might deliver.
“We accepted that there was likely to be some short-term benefits from the alliance being able to jointly reinstate services more quickly when borders are reopened, which may initially stimulate tourism,” Mr Sims said.
“However, the longer-term benefits of competition between airlines are cheaper flights and better services for consumers, which is vital to the recovery of tourism over the coming year.”
In addition to suppressing competition between the two parties in the agreement, the ACCC said the arrangement would also make it trickier for other airlines to operate routes between Australia and Japan.
“Airlines have been severely impacted by the pandemic and this has been a very difficult period for them. But preserving competition between airlines is the key to the long-term recovery of the aviation and tourism sectors, once international travel restrictions are eased,” Mr Sims said.
Following the release of the regulator’s draft decision in May, Qantas offered to offset the impact the partnership could have on competition by commencing a new service between Cairns and Tokyo once certain demand thresholds were reached.
In its final ruling, the ACCC did not buy this argument.
“We think Qantas could commence a new Cairns service without the alliance, and the timing of any such service would be best determined by commercial factors in a competitive environment. Jetstar services on this route are currently planned to start again from February 2022, without the alliance,” Mr Sims said.
In a statement, Qantas domestic and international CEO Andrew David said that the airline was disappointed with the decision.
“A closer partnership between Qantas and Japan Airlines would have meant more routes, better flight connections and more benefits to frequent flyers,” Mr David said.
“None of these benefits will be realised following the ACCC’s decision.”
About the author
About the author
Economy
Does the RBA boast the right credentials to steer the economy?
With the Reserve Bank of Australia likely to face its first independent review in 40 years, experts believe this could be a chance to bridge the gap between monetary and fiscal policy, but also to boo...Read more
Economy
Will Morrison commit to net zero by 2050?
Prime Minister Scott Morrison has yet again played down the impacts of climate change, referring to net zero as an aggressive and frustrating target. ...Read more
Economy
Consumer confidence holds ahead of reopening
The battle between consumer confidence and caution looks to be on a knife’s edge in the coming weeks. ...Read more
Economy
Unemployment fell again in August, but not for good reasons
Employment and hours worked fell nationally in August, with NSW leading the pack. ...Read more
Economy
NAB optimistic on jobs market despite another payroll miss
NAB has expressed confidence in the short-term future of the Australian jobs market, despite payroll jobs decreasing by 0.7 of a percentage point in the last fortnight, following a drop of 1.8 per ce...Read more
Economy
New and improved takeover bid sees Sydney Airport open books
The Sydney Aviation Alliance consortium, led by the IFM Investors, has been granted access to Sydney Airport books after submitting a revised acquisition proposal. ...Read more
Economy
ACCC cites LCR as it gives payment processing merger the go-ahead
The local competition watchdog has given its approval of a merger between three major players in Australia’s payment processing sector. ...Read more
Economy
Unemployment at 9.5% in August as lockdowns squeeze labour
August was the first time since the first half of 2020 that Australia’s workforce contracted for two months in a row. ...Read more
What to expect as the end of lockdown looms? Will the Stage 2 tax cuts boost your tax return? Where should investors be looking as the economy reopens?
Listen now
Could property prices inflate by another 20%? What’s happening in recent dividend announcements? Did your fund fail the YFYS test?
Listen now
What does the NSW regional permit mean for property investors? Who really wins from the BHP-Woodside merger?
Listen now
The sea and tree-change norm; Square’s acquisition of Afterpay; Why you should think twice before turning to TikTok for advice
Listen now
Ethical investment means asking about more than just risk and return
Read more
Mutual funds are coming to Australia, but could their biggest audience be elsewhere?
Read more
ASIC warns of ‘blatant’ pump-and-dump social media campaigns
Read more
The financial habits of the millennial mindset are coming into focus
Read more
Economy
Does the RBA boast the right credentials to steer the economy?
With the Reserve Bank of Australia likely to face its first independent review in 40 years, experts believe this could be a chance to bridge the gap between monetary and fiscal policy, but also to boo...Read more
Economy
Will Morrison commit to net zero by 2050?
Prime Minister Scott Morrison has yet again played down the impacts of climate change, referring to net zero as an aggressive and frustrating target. ...Read more
Economy
Consumer confidence holds ahead of reopening
The battle between consumer confidence and caution looks to be on a knife’s edge in the coming weeks. ...Read more
Economy
Unemployment fell again in August, but not for good reasons
Employment and hours worked fell nationally in August, with NSW leading the pack. ...Read more
Economy
NAB optimistic on jobs market despite another payroll miss
NAB has expressed confidence in the short-term future of the Australian jobs market, despite payroll jobs decreasing by 0.7 of a percentage point in the last fortnight, following a drop of 1.8 per ce...Read more
Economy
New and improved takeover bid sees Sydney Airport open books
The Sydney Aviation Alliance consortium, led by the IFM Investors, has been granted access to Sydney Airport books after submitting a revised acquisition proposal. ...Read more
Economy
ACCC cites LCR as it gives payment processing merger the go-ahead
The local competition watchdog has given its approval of a merger between three major players in Australia’s payment processing sector. ...Read more
Economy
Unemployment at 9.5% in August as lockdowns squeeze labour
August was the first time since the first half of 2020 that Australia’s workforce contracted for two months in a row. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
