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The ACCC has dealt a new blow to Qantas after it revealed it was proposing to stop the airline from collaborating with China Eastern on flights between their home countries.
The consumer watchdog said it believed the deal, which began in 2015, would now provide the airlines with the “opportunity and incentive to increase prices” as international aviation bounces back post-COVID-19.
It comes after the ACCC earlier this month revealed it was taking the Flying Kangaroo to court after alleging it was selling tickets to flights it had already cancelled – a decision that in part led to the early exit of CEO Alan Joyce.
The current deal was initially due to end on 31 March this year but was allowed to continue after the airlines were granted a temporary interim authorisation.
China Eastern is the only airline flying direct between Sydney and Shanghai, with the Flying Kangaroo planning to resume flights in late October.
“At this stage, we are not satisfied that the likely harm to competition from Qantas and China Eastern’s proposed coordination would be outweighed by any potential benefits,” ACCC Commissioner Anna Brakey said.
“We are concerned that the authorisation would provide Qantas and China Eastern with the opportunity and incentive to increase prices, compared to what they would charge absent the alliance, by limiting or delaying the introduction of additional capacity on the Sydney-Shanghai route as passenger demand continues to grow.
“Any additional services on routes other than Sydney- Shanghai could potentially be a public benefit but we are not satisfied they are likely to eventuate between now and March 2024.
“A key difference between now and the previous authorisations is we have not been provided with sufficient evidence that the coordination would lead to additional services on other routes between Australia and China.”
The ACCC said the current interim authorisation remained in place, and the airlines have been invited to make submissions on a transition to end authorisation. It’s also seeking submissions in response to its decision by 6 October 2023.
The ACCC first authorised the alliance in 2015 with conditions and in 2021 without conditions due to the “exceptional circumstances” of COVID-19.
The decision is yet another blow to Qantas as it continues to deal with the fallout from the ACCC taking it to court for alleging it was selling tickets to so-called ghost flights.
The organisation’s chair, Gina Cass-Gottlieb, even went so far as to suggest the airline should be fined more than $250 million if it’s found guilty.
Speaking on Radio National, Cass-Gottlieb argued there should be a “record penalty” to deter similar conduct in future from other airlines.
“We think the penalties should be in the hundreds of millions, not tens of millions, for breaches,” she said.
