ACCC looks to block coordinated operations between Qantas and China Eastern Airlines

The Australian Competition and Consumer Commission (ACCC) has issued a draft determination in which it is proposing to deny authorisation for Qantas Airways (Qantas) and China Eastern Airlines Corporation Limited (China Eastern) and their related entities (including Jetstar) to continue coordinating operations between Australia and mainland China.

The two carriers are looking to obtain authorisation for an Extended Joint Coordination Agreement that will enable them to coordinate passenger and cargo transport operations between Australia and China until the end of March 2024. However, this coordination may be viewed as a breach of competition laws, and it is only the ACCC that can authorise such agreements. “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.

Currently China Eastern is the only airline flying direct between Sydney and Shanghai with Qantas planning to resume flights in late October.

“We are concerned that the authorisation 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.

The ACCC anticipates that demand for air travel between Australia and China will likely continue to grow between now and the end of March 2024, as Chinese tour groups return and subsequent to Tourism Australia’s recent campaign in China promoting Australia. “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 added. “A key difference between now and the previous authorisations is we have not been provided with sufficient evidence that the coordination would lead to additional services on other routes between Australia and China.”