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Australia’s competition commission blocks Qantas-JAL joint business plans

13 Sep 2021 by Mark Caswell
Qantas Dreamliner

The Australian Competition and Consumer Commission (ACCC) has blocked plans for a joint business between Qantas and Japan Airlines, stating that the agreement was “not in the public interest”.

The two carriers had announced plans for the joint business on routes between Japan and Australia / New Zealand in December 2020.

But the ACCC has denied authorisation for the tie-up, stating that the agreement “would likely lead to reduced competition as international travel resumes, to the detriment of passengers travelling between Australia and Japan”.

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

“Airlines have been severely impacted by the pandemic and this has been a very difficult period for them. But preserving competition between airlines is the key to the long-term recovery of the aviation and tourism sectors, once international travel restrictions are eased.”

The ACCC concluded that granting the authorisation “would not only remove competition between Qantas and Japan Airlines, it would make it very difficult for other airlines to operate on routes between Australia and Japan”.

Japan Airlines A350

For its part, Qantas said that it was disappointed by the decision, with the airline’s domestic and international CEO Andrew David commenting:

“A closer partnership between Qantas and Japan Airlines would have meant more routes, better flight connections and more benefits to frequent flyers. None of these benefits will be realised following the ACCC’s decision.

“We know the recovery of international travel is going to be slow and bumpy. It will take years for the whole travel and tourism industry to fully recover from Covid, so getting the policy settings right is going to be critical as key routes are rebuilt essentially from scratch. Getting that right will ultimately benefit the recovery of the Australian economy.

“This is particularly unfortunate for Queensland and Cairns, which would have benefited from a direct Qantas route to Tokyo that would have seen a lot of travellers wanting a premium experience.

“Without being able to coordinate with JAL, and in particular to draw Japanese tourists into northern Queensland using JAL’s extensive marketing reach in Japan, the planned flights between Cairns and Tokyo are just not commercially viable for Qantas.

“We explained that dynamic to the ACCC at length, and we disagree with their assessment that the route is viable without the alliance.”

qantas.com.au, jal.co.jp, accc.gov.au

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