Global Travel Media » Blog Archive » Will Qantas reveal secrets of its Cathay codeshare deal?

Home » Headline News » Currently Reading:

Will Qantas reveal secrets of its Cathay codeshare deal?

January 29, 2019 Headline News 1 Comment Email Email


The Australian Government’s International Air Services Commission (IASC) has demanded more information from Qantas about the airline’s proposed codeshare deal with Cathay Pacific on routes between Australia and Hong Kong – and it reserves the right to publish details.

This follows an objection to the codeshare proposal by Virgin Australia and questions by the Australian Competition and Consumer Commission (ACCC).

Qantas and Cathay want to share codes to Hong Kong from 31 March 2019. Qantas flies nonstop from Brisbane, Melbourne and Sydney to Hong Kong, using a variety of aircraft, including A330s, A380s, B787 Dreamliners – even the venerable B747. Cathay Pacific flies from Hong Kong to Australia’s four major gateways: Brisbane, Melbourne, Perth and Sydney.

Together, they constitute a formidable force on the route. See: Qantas keen to codeshare with Cathay to Hong Kong

Virgin Australia, the only other operator of flights between Australia and Hong Kong, has lodged an objection to the proposal, telling the IASC it is concerned the proposed deal “will result in an unnecessary expansion of both Qantas and Cathay Pacific’s market power, to the detriment of the travelling public”.

Virgin says Qantas and Cathay Pacific currently dominate the Hong Kong route, holding a combined frequency share of 88% and a combined seat capacity share of 90%.

“In the 12 months ending October 2018, both airlines recorded passenger load factors exceeding 80% and together carried 92% of all passengers travelling between Australia and Hong Kong,” Virgin wrote to the IASC.

Cathay Pacific A350-900

“Virgin Australia and Hong Kong Airlines carried the balance of passengers on the route, recording passenger load factors of 66% and 61% respectively during the period. Hong Kong Airlines withdrew from the Hong Kong route in October 2018, leaving Virgin Australia as the only other competitor in the market.”

Questioning how such a deal would benefit the travelling public, Virgin also states that Qantas’ application “does not provide sufficient information to allow interested stakeholders, including Virgin Australia and the Australian Competition and Consumer Commission, to properly assess and comment on the potential impact of the expansion of its code share arrangement with Cathay Pacific.

Cathay Pacific A350-900

“In particular, the application does not contain any information as to the basic scope of the proposed cooperation between the two carriers, such as:

  • the city pairs served by Qantas on which Cathay Pacific will place its code;
  • whether reciprocal code share services are in prospect, including on city pairs served by both carriers; and
  • whether the code share arrangement will be of a free sale or hard-block nature.”

Virgin says any strengthening of Qantas cooperation with Cathay Pacific is likely to “increase the market power that the two carriers individually and collectively hold on the Hong Kong route.

“This would inevitably diminish the competitive forces in the market and may lead to higher airfares and reduced choices for customers, with corresponding implications for Australian tourism and trade.”

The ACCC has questions of its own. After reviewing Qantas’ application and Virgin’s objection, the ACCC says it wants more information from Qantas.

“Qantas’ application notes that its code share agreement with Cathay Pacific has been provided to the IASC on a confidential basis. The ACCC would also benefit from access to the code share agreement between Qantas and Cathay Pacific, which could be used by the ACCC on a confidential basis if so requested.”

The ball is now back in Qantas’ court, with IASC having asked the airline to provide details on how its proposed code share with Cathay Pacific would enhance the welfare of Australians “by promoting economic efficiency through competition in the provision of international air services, resulting in:

(a) increased responsiveness by airlines to the needs of consumers, including an increased range of choices and benefits;

(b) growth in Australian tourism and trade; and

(c) the maintenance of Australian carriers capable of competing effectively with airlines of foreign countries.”

The IASC wants Qantas to specify the city-pair sectors where it proposes to codeshare with Cathay Pacific on the Hong Kong route.

Additionally, Qantas must provide the IASC with:

  • passenger numbers and market share on each of the city-pair sectors it directly operates (Brisbane-Hong Kong; Melbourne-Hong Kong; Sydney-Hong Kong);
  • Qantas’ yield and load factors on each of the city pairs it directly operates.

The IASC warns Qantas it will publish the Qantas’ response, which must be provided by noon on Friday week, 8 February 2019.

Virgin Australia A330-200

There’s a let-out, but it’s not guaranteed.

The IASC tells Qantas:

“If you are providing commercially sensitive information, you may wish to provide two responses to the Commission: one version suitable for publication and the other version to be treated on a confidential basis. However, the Commission reserves the right to determine if the information provided on a confidential basis has to be made public in the interest of transparency and due process to enable stakeholders to comment substantively. Qantas will be consulted should this issue arise before releasing any such information publicly.”

Written by Peter Needham



Currently there is "1 comment" on this Article:

  1. AgentGerko says:

    Qantas has a long history of trying to muscle competitors out of Australia. Their long partnership with BA is the primary reason why, apart from BA, not one single Euro airline flies its own aircraft to Australia. Recently it signed an agreement with Air NZ on trans-Tasman, and now it wants CX to Hong Kong. It’s perfectly clear that both their NZ and CX partnerships are purely intended to cripple the little competition that Virgin offers. They’re already hugely profitable so its not a money issue. It’s not even a Oneworld thing, as Air NZ is a Star Alliance carrier, supposedly a competitor. It’s the little leprechaun at his big business bullying best.

Comment on this Article:







Time limit is exhausted. Please reload CAPTCHA.

Platinium Partnership

ADVERTISEMENTS

Elite Partnership Sponsors

ADVERTISEMENTS

Premier Partnership Sponsors

ADVERTISEMENTS

Official Media Event Partner

ADVERTISEMENTS

Global travel media endorses the following travel Publication

ADVERTISEMENTS

GLOBAL TRAVEL MEDIA VIDEOS

ADVERTISEMENTS

%d bloggers like this:
%d bloggers like this:
sitemap