Aviation

ACCC blocks Qantas’ proposed tie-up with Japan Airlines

The Australian Competition & Consumer Commission (ACCC) has denied authorisation for Qantas and Japan Airlines (JAL) to coordinate flights under the terms of a joint business agreement.

The ACCC found that the agreement would likely lead to reduced competition as international travel resumes, to the detriment of passengers travelling between Australia and Japan.

“The ACCC can only authorise an agreement between competitors if it is satisfied the public benefits would outweigh the harm to competition. The alliance did not pass this test,” ACCC chair Rod Sims said.

“Airlines have been severely impacted by the pandemic and this has been a very difficult period for them. But preserving competition between airlines is the key to the long-term recovery of the aviation and tourism sectors, once international travel restrictions are eased.”

In the year before the pandemic, Qantas and JAL together flew about 85 per cent of passengers travelling between Australia and Japan.

They were each other’s closest competitors on the largest route (Sydney-Tokyo) and the only airlines operating on the second-largest route (Melbourne-Tokyo).

The ACCC concluded that granting the authorisation would not only remove competition between Qantas and JAL, but would make it very difficult for other airlines to operate on routes between Australia and Japan.

Virgin Australia told the competition watchdog that it would be more difficult to enter the Australia-Japan route if it is required to compete with Qantas and JAL acting jointly rather than as individual competing airlines.

“We accepted that there was likely to be some short-term benefits from the alliance being able to jointly reinstate services more quickly when borders are reopened, which may initially stimulate tourism,” Sims said.

“However, the longer-term benefits of competition between airlines are cheaper flights and better services for consumers, which is vital to the recovery of tourism over the coming years.”

Following the ACCC’s draft decision in May, Qantas offered a commitment to commence a new service between Cairns and Tokyo once certain demand thresholds were reached.

“We think Qantas could commence a new Cairns service without the alliance, and the timing of any such service would be best determined by commercial factors in a competitive environment,” Sims said.

“Jetstar services on this route are currently planned to start again from February 2022, without the alliance.”

The ACCC has granted several exemptions from competition law during the COVID-19 pandemic.

These exemptions have typically been for short periods and involved targeted proposals for industry participants to come together to ensure supply of resources during the pandemic.

The competition watchdog found that the Qantas and JAL alliance would have allowed the airlines to stop competing on all aspects of price and service for three years.

Both Qantas and JAL expressed their disappointment at the ACCC’s decision.

“We’re obviously disappointed with this decision,” said Andrew David, CEO of Qantas’ domestic and international operations.

“A closer partnership between Qantas and Japan Airlines would have meant more routes, better flight connections and more benefits to frequent flyers. None of these benefits will be realised following the ACCC’s decision.

“We know the recovery of international travel is going to be slow and bumpy. It will take years for the whole travel and tourism industry to fully recover from COVID, so getting the policy settings right is going to be critical as key routes are rebuilt essentially from scratch. Getting that right will ultimately benefit the recovery of the Australian economy.

“This is particularly unfortunate for Queensland and Cairns, which would have benefited from a direct Qantas route to Tokyo that would have seen a lot of travellers wanting a premium experience.

“Without being able to coordinate with JAL and, in particular, to draw Japanese tourists into northern Queensland using JAL’s extensive marketing reach in Japan, the planned flights between Cairns and Tokyo are just not commercially viable for Qantas.

“We explained that dynamic to the ACCC at length, and we disagree with their assessment that the route is viable without the alliance.”

JAL executive officer and senior vice president of route marketing, international relations and alliances, Ross Leggett, said: “Japan Airlines is also truly disappointed with the ACCC’s decision to disapprove our proposed joint business.

“We especially believed that the joint business with Qantas would have accelerated the recovery of leisure and business traffic between Japan and Australia, with clear economic and social benefits to both countries in the extremely challenging environment precipitated by the COVID-19 pandemic.

“It is unfortunate that the opportunity to provide enhanced customer choice and extensive travel industry growth opportunities will not be realised.”


Featured image source: iStock/MicroPixieStock



SEE WHAT PEOPLE ARE SAYING

Leave a Reply

Hotels

QT Newcastle signature restaurant and bar revealed!

It might seem like we’re calling Newcastle a ‘cutie’ but rest assured, our cutest NSW city award still goes to Griffith.

Share

CommentComments

Events

Australian Tourism Exchange 2022 concluded and next year’s location revealed!

The rumours are that next year’s event will have twice as many arancini balls and half the day will be dedicated to playing Mario Kart. Bear in mind our source for this was a 6 year old boy…

Share

CommentComments

Destinations

Japan gets closer to reopening its border with experimental group tours

Don’t worry, the fact that the tours are operating is what makes them experimental. You won’t have to remember your high school science skills for a trip to Japan (at least we don’t think so).

Share

CommentComments

Travel Agents

Do you want to explore South Australia? Complete a few training modules for your chance at a famil!

The team at South Australian Tourism Commission has your next holiday sorted with a famil offering for travel agents and product managers.

Share

CommentComments

Tourism

ATEC tickled pink with Labor Party tourism funding promise

As professional journalists, we at Travel Weekly remain completely unbiased when it comes to political matters. However, we’re just going to leave this here…

Share

CommentComments

Tourism

“The time is right”: industry legend, Barry Mayo, retires after 60+ years in travel

We think we speak for everyone when we say we can’t imagine an Australian travel industry without this industry stalwart!

Share

CommentComments

Tourism

Tourism Western Australia partners with AAT Kings and showcases WA wildlife to Sydney

Rumours are that part of the collaboration deal is that the AAT execs all get free camel rides whenever they want, which we completely understand.

Share

CommentComments

Cruise

Humans of Antarctica

Travel Weekly joined Aurora Expeditions for an Antarctic circle expedition and met some amazing travellers who waited over two years for the adventure.

Share

CommentComments

Travel Agents

Flight Centre scores whopping government contract

Work for Flight Centre? Your tax dollars could now be contributing to your own salary, according to our vague understanding of the ATO.

Share

CommentComments

Aviation

Start-up airline, Bonza, to embrace Uber model

However, it’s not yet confirmed whether the pilots will be willing to give life advice to drunk passengers, like the rideshare app.

Share

CommentComments

Midweek Interview

Midweek Catch-up with UnCruise Adventures’ Kirsty Bozlee

We’re not sure how to UnCruise… and when we asked the company’s vice president of operations, she thought we were joking.

Share

CommentComments

Events

Travel DAZE to feature Aussie film premiere!

We’ve got another spate of fabulous speakers to announce for Travel DAZE 2022 as well as a surprise big reveal.

Share

CommentComments