QF, EK get green light but with conditions

QF, EK get green light but with conditions
By admin

Qantas and Emirates have been given draft approval to form an alliance for five years – half the number requested by the carriers – but conditions have been imposed on trans-Tasman cooperation amid fears of reduced capacity and higher prices.

In a ruling issued this morning, the competition regulator told the airlines they must maintain a base level of capacity on four overlapping routes; Sydney-Auckland, Melbourne-Auckland, Brisbane-Auckland and Sydney-Christchurch.

The Australian Competition and Consumer Commission (ACCC) said the condition will ensure Qantas and Emirates do not reduce the number of seats in order to raise prices.

ACCC chairman Rod Sims said the alliance overall will result in "material, although not substantial benefits to Australian consumers".

"The ACCC is of the view that the main benefit arising from the alliance is an improved product and service offering by the two airlines to their customers," he said. "This includes increased customer access to each others' flights, destinations and frequent flyer programs."

While the ACCC concluded the impact of the alliance could result in "some public detriments" on routes where Qantas and Emirates overlap, those detriments would be mitigated by others factors, including competition from established airlines.

However, that would not extend to overlapping trans-Tasman routes where there was a threat of reducing or limiting capacity "in order to raise airfares", the ACCC said.

"Therefore the ACCC is proposing a condition to restrict the ability of the alliance in this regard," Sims said.

The introduction of a second requirement to grow the number of seats on the four routes "in accordance with a specified growth factor" was delayed following claims by Qantas and Emirates that there is already excess capacity.

Sims said: "Given the dynamic nature of the aviation industry, the limited extent of the public benefits and the significant role of the trans-Tasman capacity condition, the ACCC considers it appropriate to review this authorisation earlier than the 10 years requested by Qantas and Emirates.

"In the circumstances, the ACCC proposes to grant authorisation for five years."

Submissions are requests from Qantas, Emirates and other interested parties ahead of a final ruling.


Email the Travel Weekly team at traveldesk@travelweekly.com.au

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