Tourism bodies, including lobby groups, an airport, state authorities and a major pilots’ association, are pressing the Australian Competition and Consumer Commission (ACCC) to do a U-turn and approve a proposed deeper alliance between Qantas and Shanghai-based China Eastern.
Yesterday, the ACCC agreed to extend the deadline on the matter.
The ACCC has already signalled it will block the alliance. In a draft decision in March, the ACCC said it proposed to deny authorisation for Qantas and China Eastern to coordinate their operations between Australia and China under a proposed Joint Coordination Agreement.
“The ACCC considers that the agreement is likely to result in significant public detriment by giving Qantas and China Eastern increased ability and incentive to limit capacity and/or increase airfares on the Sydney-Shanghai route,” the ACCC stated.
The ACCC’s initial objection sprang from concerns that the proposal would give the two airlines more than 80% of direct capacity between Sydney and Shanghai.
Since then, the industry has rallied behind Qantas and China Eastern.
Yesterday, the ACCC agreed to a Qantas request to extend the deadline for submissions.
The ACCC has also extended its consultation period for the proposed alliance until 31 August 2015 to give more time for Qantas to provide a submission and additional information.
Among submissions on the matter already received, Tourism and Events Queensland chairman Stephen Gregg wrote: “The proposed Joint Venture between Qantas and China Eastern would have significant positive benefits for Queensland tourism, helping to generate economic growth and jobs in tourism and other sectors.”
The Australian and International Pilots Association (AIPA) said the ACCC’s draft determination appeared to lean “far too heavily on what is ‘possible’ rather than what is actually ‘likely’ in the context of authorisation by the Australian and Chinese governments”.
AIPA president Nathan Safe wrote that AIPA “strongly recommends that the ACCC refocus the decision on providing Qantas and China Eastern the opportunity to demonstrate that the public detriment envisaged by the ACCC does not arise and that similar Coordination Agreements can be appropriately constrained by approval conditions”.
The Australian Tourism Export Council (ATEC) has also thrown its weight behind the proposal.
“Given the importance of the China market, and with the recent expansion of the China/Australia Air Services Agreement, ATEC supports the Qantas/China Eastern partnership in that it will improve aviation services between the two markets, thereby supporting the growth in international visitor arrivals and trade relations,” ATEC managing director Peter Shelley submitted.
Other support has come from the National Tourism Alliance (NTA), which comprises state and national industry associations with an interest in Australia’s tourism and hospitality industry.
“We write to you again to seek a reconsideration of the ACCC’s draft determination proposing to deny authorisation for Qantas and China Eastern to coordinate their operations between Australia and China under the proposed Joint Coordination Agreement,” the NTA wrote.
And from Sydney Airport, managing director and chief executive Kerrie Mather wrote that: “Given the importance of the China market, and with the recent expansion of the China/Australia Air Services Agreement, Sydney Airport would support any initiative that would significantly improve aviation links and services between the two markets supporting the growth of inbound tourism and trade flows”.
It should all help the applicants’ case.
The Department of Infrastructure and Regional Development has also said it sees “no reason” to deny approval for the proposed alliance between Qantas and China Eastern.
Qantas and China Eastern want approval for five years for their proposed alliance. The Sydney-Shanghai route is the only route on which their services overlap.
Written by Peter Needham