Australian regulator proposes to deny Qantas-China Eastern Airlines coordination

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FILE PHOTO: A ground worker walking near a Qantas plane is seen from the international terminal at Sydney Airport in Australia, November 29, 2021. REUTERS/Loren Elliott/File photo

(Reuters) -Australia’s competition regulator said on Friday it intended to deny authorisation for Qantas Airways and China Eastern Airlines to coordinate operations between the two countries, citing competition concerns amid increased demand.

The Australian Competition and Consumer Commission (ACCC) said an agreement that enabled the two key competitors to coordinate passenger and cargo transport flights between Australia and China until the end of March 2024 could potentially breach competition laws.

Qantas has been under the radar with the flagship carrier suffering a string of reputational damage after the ACCC initiated legal proceedings for allegedly selling tickets for thousands of cancelled flights, following which its long-serving CEO Alan Joyce announced an early retirement.

Earlier this week, Australia’s top court ruled that the airline broke the law by sacking 1,700 ground staff and replacing them with contractors early in the COVID-19 pandemic.

The regulator had previously granted the two airlines an interim authorization seeking time to further assess the implications of the coordination for public benefits.

ACCC Commissioner Anna Brakey said any additional services on routes other than Sydney- Shanghai could potentially be a public benefit but added that the ACCC was not satisfied they were likely to kick-start 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,” she added.

The regulator, however, said the interim authorisation remained in place with the two airlines expected to make submissions for the regulator to change their mind on ending the authorisation.

ACCC also highlighted that the authorisation could create a path for the airlines to increase prices in comparison to what they would have charged in the absence of collaboration.

Qantas declined to comment, while China Eastern Airlines did not immediately respond to a Reuters request to comment.

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