ACCC grants conditional authorisation for an alliance between Qantas and Emirates
#1
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ACCC grants conditional authorisation for an alliance between Qantas and Emirates
The Australian Competition and Consumer Commission has decided to grant authorisation, subject to a condition, for an alliance between Qantas Airways Limited and Emirates until 31 March 2018.
The alliance will involve coordination of the airlines’ passenger and cargo transport operations and other related services.
“The ACCC considers that the alliance is likely to result in public benefits through enhanced products and service offerings by the airlines, and improved operating efficiency,” ACCC Chairman Rod Sims said.
“In particular, the alliance is likely to provide Qantas and Emirates customers with increased access to a large number of existing frequencies and destinations under a single airline code, improved connectivity and scheduling, and access to each alliance partner’s frequent flyer programs. The alliance is also likely to provide the airlines with increased flexibility to manage their fleet.”
“Taking all of this together, the ACCC is satisfied that the alliance is likely to result in material, but not substantial, public benefits.”
“The ACCC considers that the alliance is likely to result in detriments through its effect on competition in regions where Qantas and Emirates currently offer competing air passenger and cargo transport services. However, in most of these regions, the ACCC has identified competitive constraints which mean that these detriments are likely to be minimal,” Mr Sims said.
“The one exception is the trans-Tasman where Qantas and Emirates compete on four routes which accounted for around 65% of total passenger capacity between Australia and New Zealand in the year to 30 June 2012. On these routes, the ACCC is concerned that Qantas and Emirates will have the ability and incentive to reduce or limit growth in capacity in order to raise airfares.”
In order to address this concern, the ACCC has imposed a condition of authorisation which requires the airlines to maintain at least their pre-alliance aggregate capacity on the four overlapping trans-Tasman routes, subject to a review to consider whether increases in the minimum required capacity are warranted.
With this condition, the ACCC is satisfied that the relevant net public benefit tests are met.
“The ACCC has assessed the public benefits and detriments of the alliance on the basis that the scope of Qantas’ international operations in the likely future without the alliance is not materially different to the likely future with the alliance. In particular, the ACCC does not accept or rely on the claim that Qantas International is in “terminal decline” and unable to compete effectively or operate profitably absent the alliance,” Mr Sims said.
The conduct authorised by the ACCC enables the airlines to coordinate their passenger and cargo transport operations and related services (including line maintenance engineering services and flight training for air crew and cabin crew) as well as joint procurement of goods and services (such as aviation fuel). Qantas and Emirates have not sought authorisation for the supply to third parties of catering and aircraft cleaning services, where coordination between the two airlines may give rise to competition concerns.
The ACCC has amended the interim authorisation granted on 17 January 2013 to reflect the terms of the final determination. Interim authorisation will remain in force until the ACCC’s decision comes into effect.
Authorisation provides protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010. Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.
Further information, including the application, public submissions and ACCC decisions can be found at
The alliance will involve coordination of the airlines’ passenger and cargo transport operations and other related services.
“The ACCC considers that the alliance is likely to result in public benefits through enhanced products and service offerings by the airlines, and improved operating efficiency,” ACCC Chairman Rod Sims said.
“In particular, the alliance is likely to provide Qantas and Emirates customers with increased access to a large number of existing frequencies and destinations under a single airline code, improved connectivity and scheduling, and access to each alliance partner’s frequent flyer programs. The alliance is also likely to provide the airlines with increased flexibility to manage their fleet.”
“Taking all of this together, the ACCC is satisfied that the alliance is likely to result in material, but not substantial, public benefits.”
“The ACCC considers that the alliance is likely to result in detriments through its effect on competition in regions where Qantas and Emirates currently offer competing air passenger and cargo transport services. However, in most of these regions, the ACCC has identified competitive constraints which mean that these detriments are likely to be minimal,” Mr Sims said.
“The one exception is the trans-Tasman where Qantas and Emirates compete on four routes which accounted for around 65% of total passenger capacity between Australia and New Zealand in the year to 30 June 2012. On these routes, the ACCC is concerned that Qantas and Emirates will have the ability and incentive to reduce or limit growth in capacity in order to raise airfares.”
In order to address this concern, the ACCC has imposed a condition of authorisation which requires the airlines to maintain at least their pre-alliance aggregate capacity on the four overlapping trans-Tasman routes, subject to a review to consider whether increases in the minimum required capacity are warranted.
With this condition, the ACCC is satisfied that the relevant net public benefit tests are met.
“The ACCC has assessed the public benefits and detriments of the alliance on the basis that the scope of Qantas’ international operations in the likely future without the alliance is not materially different to the likely future with the alliance. In particular, the ACCC does not accept or rely on the claim that Qantas International is in “terminal decline” and unable to compete effectively or operate profitably absent the alliance,” Mr Sims said.
The conduct authorised by the ACCC enables the airlines to coordinate their passenger and cargo transport operations and related services (including line maintenance engineering services and flight training for air crew and cabin crew) as well as joint procurement of goods and services (such as aviation fuel). Qantas and Emirates have not sought authorisation for the supply to third parties of catering and aircraft cleaning services, where coordination between the two airlines may give rise to competition concerns.
The ACCC has amended the interim authorisation granted on 17 January 2013 to reflect the terms of the final determination. Interim authorisation will remain in force until the ACCC’s decision comes into effect.
Authorisation provides protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010. Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.
Further information, including the application, public submissions and ACCC decisions can be found at
#3
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Trans-Tasman is a big win, with EK's stated plans to reduce capacity and leave it to QF being scuppered. That at least ensures continued A380/777 services TT.
#4
Join Date: Sep 2006
Location: LON
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On Tuesday ACCC also approved QF/JQ to cooperate with JQ Asia/Pacific/Japan/HK, hopefully this improves things in that area.
http://www.theaustralian.com.au/busi...-1226606550452
http://www.theaustralian.com.au/busi...-1226606550452
#5
Join Date: Jul 2007
Programs: QFF
Posts: 5,304
On Tuesday ACCC also approved QF/JQ to cooperate with JQ Asia/Pacific/Japan/HK, hopefully this improves things in that area.
http://www.theaustralian.com.au/busi...-1226606550452
http://www.theaustralian.com.au/busi...-1226606550452
#8
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#9
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Dave
#10
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Can't see what the Government of the Seventh State ( ) can do about it, since there isn't a skerrick of a chance that QF and EK will be colluding on trans-Tasman services. In favt, the ACCC mandating that QF and EK maintain current frequencies under the status quo will mean no change under the new arrangements compared to the old.
Dave
Dave
Unfortunately I see the end of the good premium cabin sale fares that we used to get over here, just like with the NZ/CX alliance.
#11
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Removing sale pricing an premium fares, not sure if that will happen, both carriers will want to fill their planes. Flying an A380 or a B777 across the ditch is exxy, and I think EK will still want to get every dollar they can possibly get.
Dave
#12
Join Date: Feb 2007
Programs: NZ Koru
Posts: 6,414
So are the QF Clubs days in Auckland numbered?
#13
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QF Club will stay as the Emirate lounge is open only fr limited periods but there are many more QF, LA, CX, TN etc flights that use it.
#14
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I believe number_6 meant a win for PAX, not the airlines:I read it a couple of time before realising it really make no sense to read it any other way.
#15
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A devious and ill-motivated person might wonder what would have happened if the NZ authorities had REQUIRED EK to reduce their flying into NZ as a result of the agreement with QF.
Just wondering
Fred
Just wondering
Fred