Australia’s International Air Services Commission (IASC) has denied Qantas’ request to expand its codeshare agreement with Cathay Pacific.
In its draft ruling, the IASC said the airlines’ proposed codeshare agreement for flights between Australia and Hong Kong was “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”.
“If this occurs, it is likely to weaken competition on the route, leading to an increase in prices and/or a reduction in other benefits to consumers,” the IASC said.
“The commission finds that the likely public benefits of the variation are substantially outweighed by the likely public detriment that would follow from the proposed variation.”
Under the proposed agreement, Qantas wanted to add its code to an additional 19 one-way routes operated by Cathay/Cathay Dragon from Hong Kong to India, Japan, South Korea and Sri Lanka.
Qantas planned to also add its code to select Cathay services from Hong Kong to Sydney, Melbourne and Brisbane, where passengers are connecting to a Qantas Australian domestic service.
In return, Cathay, would add its code to an additional 32 one-way domestic Australian routes operated by Qantas.
The airline wanted to also add its code to select Qantas services from Sydney, Melbourne and Brisbane to Hong Kong, where passengers are connecting to a Cathay/Cathay Dragon service to another destination in Asia.
Qantas was seeking approval from the IASC for Cathay to the last part of the deal, and did not require approval from to engage in the other three elements of the proposed expanded codeshare arrangement.
The IASC’s draft ruling would be music to the ears of those at Virgin Australia and the Australian Competition and Consumer Commission, which both argued against Qantas’ application to expand its codeshare arrangement with Cathay.
In a statement to Travel Weekly, a Qantas spokesperson said: “We’re disappointed with the draft decision to reject our application to expand our codeshare with Cathay Pacific.
“The codeshare has already delivered great benefits for our customers, and expanding it would create even more options for travellers and improve opportunities for frequent flyers.
“We are reviewing the draft decision and are considering our next steps.”
A Cathay Pacific spokesperson told Travel Weekly: “We believe the expanded codeshare will create more options for travellers and improve opportunities for frequent flyers.
“We will consider our next course of action.”