ACCC rejects QF alliance

THE Australian Competition & Consumer Commission (ACCC) has formally rejected a proposal put forward by Qantas and Japan Airlines to coordinate a joint business agreement on flights between Australia and Japan.

The verdict followed a draft decision by the ACCC to knock the collaboration on the head in May (TD 06 May), with the consumer watchdog claiming a cooperation between Qantas and JAL would likely lead to reduced competition to the detriment of travellers and competitor airlines.

“The ACCC can only authorise an agreement between competitors if it is satisfied the public benefits would outweigh the harm to competition - the alliance did not pass this test,” ACCC Chair Rod Sims said.

Virgin Australia was vocal in its objection to any planned jointventure, telling the ACCC in a submission that it would be more difficult to enter the Australia-Japan route if it meant competing with Qantas and Japan Airlines acting jointly rather than as individual competing airlines.

When the draft rejection was initially handed down, Qantas stated it would introduce a Cairns to Tokyo route as an incentive to rubber-stamp the proposal, however, the ACCC was unmoved by the commitment.

“We think Qantas could commence a new Cairns service without the alliance, and the timing of any such service would be best determined by commercial factors in a competitive environment,” Sims argued, adding that Jetstar services on this route are already planned to start again from Feb 2022 without the alliance.

Qantas expressed its “disappointment” with the call, confirming it means abandoning plans to proceed with the Cairns/Tokyo route as it’s “not commercially viable” without JAL.

If the carriers had received the green light, the agreement would have allowed the pair to stop competing on all aspects of price and service for three years.