Qantas praised rival Virgin Australia as “an effective and vigorous competitor on the Australia-Hong Kong route” in a last-ditch appeal aimed at persuading Australia’s International Air Services Commission (IASC) to reverse a decision not to let Qantas share codes with Cathay Pacific on flights between Australia and Hong Kong.
The Qantas appeal said its proposed codeshare with Cathay would produce “tangible and immediate consumer benefits”.
In a spirited response to IASC’s decision to reject the code-share application, Qantas argued that the “relatively limited expansion of an existing codeshare agreement” couldn’t possibly have such detrimental impacts as the IASC had claimed.
“Any claims that the Proposed Conduct could so drastically influence market structure and cause another airline to possibly exit a market must be fully tested and substantiated,” Qantas contended.
Despite its limited praise of Virgin as a competitor, Qantas continued: “Virgin Australia claims that the Proposed Codeshare would ‘significantly inhibit’ its ability to build presence and compete over the medium to long term. However, the reality is that any deterioration in Virgin Australia’s performance on the Australia-Hong Kong routes is a matter for Virgin Australia’s management.”
Cathay Pacific A350-900
“In Qantas’ view, the Draft Decision neglects to give proper weight to the fact that the Proposed Codeshare would immediately deliver real and tangible consumer benefits through increased schedule choice, reduced connection times and frequent flyer benefits.”
The full argument put by Qantas can be read here.
The IASC had found earlier that although a codeshare would result in some consumer benefits “in terms of improved connectivity and potentially some increase in route options”, it would also be “likely to 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”. See: IASC rejects Qantas and Cathay codeshare plan to HK
Qantas Boeing 787-9 Dreamliner
In the end, the Qantas submission failed to shift the IASC’s view.
“After conducting a review, the Commission proposes not to vary the Determination in the manner requested by Qantas,” the IASC stated bluntly.
Written by Peter Needham
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