The ACCC has indicated it will continue to allow Qantas and Emirates to coordinate their flight schedules despite strong opposition from travel agents.
However, in a draft determination, the competition watchdog said it would keep a condition that means the airlines must report their activity between Sydney and Christchurch.
The deal, hailed by Qantas CEO Alan Joyce as one of “the most significant” in aviation, was first agreed in 2013, and the airlines are seeking to extend it for another five years.
Under the agreement, the Flying Kangaroo’s customers can also book tickets through Dubai, connecting to the larger airline’s huge network, while Emirates passengers enjoy similar perks in reverse. It covers routes between Australia and the UK/Europe, New Zealand, Asia, the Middle East and North Africa.
“The ACCC considers that the proposed conduct would be likely to result in public benefits, including increased connectivity and convenience and greater loyalty program benefits for consumers,” said the organisation’s commissioner, Anna Brakey.
“The coordination will give customers greater choice of flight times and flexibility when travelling on routes where the operations of Qantas and Emirates overlap.”
The ACCC added it believed the collaboration would not raise competition concerns except in relation to the Sydney-Christchurch service.
“On this route, the ACCC considers the conduct would be likely to result in a public detriment by enhancing the applicants’ ability or incentive to unilaterally increase price or reduce services on the route,” read the draft determination.
“To address this public detriment, the ACCC considers that it is appropriate for it to monitor the Applicants’ price and capacity decisions on the Sydney-Christchurch route.
“The ACCC intends to require as a condition of authorisation that the applicants report data to the ACCC regarding the number of seats operated and passengers flown, passenger revenue and operating costs on the route over the period of authorisation.
“This would allow the ACCC to monitor the competitive dynamics on the route and identify whether and to what extent the public detriment (as a result of the unilateral effects noted above) may be emerging.”
The agreement, which has yet to be finalised, was criticised by AFTA, the peak body for Australian travel agents.
The group said allowing Qantas and Emirates to collaborate would entrench the two airlines’ market power and not lead to capacity increases.
The ACCC is now seeking final submissions in response to the draft determination by 12 July 2023 before making its final decision.
Qantas CEO Alan Joyce previously said the collaboration was “more important than ever” as the industry recovers from the pandemic.
The good news comes despite the ACCC blocking a deal for Qantas to fully purchase FIFO carrier Alliance.
The Flying Kangaroo has hinted, however, it will fight the decision, with Joyce telling journalists the business is “reviewing its options”.
