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Qantas and China Eastern appease ACCC by ending joint business activities

The two airlines are going their separate ways but will retain an existing codeshare agreement to support each other’s domestic networks.

Qantas and China Eastern Airlines are ending their cooperation on pricing and flight schedules.

Qantas has ceded to concerns held by Australia’s competition regulator on the extension of its joint business tie-up with China Eastern Airlines to March 2024, with the two carriers now going their separate ways.

The two carriers have withdrawn their application to continue coordinating pricing, schedules and joint marketing material on flights between Sydney and Shanghai – which Qantas will resume flying on its own metal from 29 October.

Codeshare arrangements will continue between the two airlines on routes not flown by both, allowing travellers on both airlines to connect to extensive domestic networks beyond their respective hubs.

A draft determination last month by the ACCC opted to deny authorisation for Qantas and China Eastern Airlines to continue their cooperation on flights between Sydney and Shanghai as it relates to passenger and freight services.

The ACCC said without any meaningful competition between the two, any agreement between the two could breach competition laws, with the regulator only able to authorise cooperations of this nature if the public benefits outweigh the harm to competition.

The two carriers are ceding to concerns from the ACCC on competition.

“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,” said ACCC Commissioner Anna Brakey.

The regulator said the return of Chinese tour groups to Australia and Tourism Australia’s ongoing ‘Come and Say G’Day’ campaign in China is likely to keep demand for air travel between the two cities strong until at least March 2024, with no evidence provided an ongoing authorisation would lead to new air services between other cities in Australia and China in the next six months.

Qantas said in a statement the two airlines have started the process to decouple the joint business developed over the past eight years, saying the partnership has delivered significant benefits for customers and Australian tourism in that time.

“To ensure there is no impact on customers, Qantas and China Eastern will honour all existing bookings, including the frequent flyer benefits and lounge access customers enjoyed under the joint business.

“China Eastern remains an important partner for Qantas. Our codeshare agreement will continue on routes between Australia and China which both airlines don’t operate, offering Qantas Frequent Flyers the opportunity to earn and redeem points on selected China Eastern flights.

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Written by: Matt Lennon
Published: 25 October 2023

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