ACCC Gives Green Light to Qantas China Eastern Alliance

21st Aug 2015

Earlier this week, ACCC (Australian Competition and Consumer Commission proposed to block the alliance between the two carriers, citing it could lead to a monopoly on some routes. However, the regulator has now changed its opinion and is giving a green light for this arrangement.

The code-share partnership includes coordinating flight schedules and fare prices between the two sides.

Namely, both airlines have committed to adding extra frequencies and destinations between Australia and China, which was enough for ACCC.

Both carriers welcomed the decision in a joint statement issued this Friday.

Chief executive officer of Qantas Alan Joyce said the carrier put a strong case to the regulator, pointing out the advantages of its alliance with China Eastern for Australian tourism industry and tourists themselves.

Joyce said:

"China is Australia's most valuable inbound tourism market - projected to contribute up to AUS$9 billion annually to the Australian economy by 2020. Greater connectivity and improved customer benefit will also help boost relations between the two countries as a result of the Australia-China Free Trade Agreement signed last year."

The commission required that Qantas and China Eastern increase the capacity on routes between Australia and Shanghai (China Eastern's hub) by 21 per cent over the next five years.

Chairman of the ACCC Rod Sims said:

"The ACCC considers that the addition of a significant number of new services, and expanded range of destinations, reflecting this gateway strategy, would constitute a significant public benefit."

Since its original decision, ACCC said, China Eastern has proposed to increase frequencies on routes between Shanghai and Sydney, Melbourne and Cairns over the next two year.

The carriers also promised to increase the range of destinations their code-share agreement covers. The two have a reciprocal code-share agreement on a total of 17 flights per week between Australia and China.