Australia to Block Qantas China Eastern Link
1st Apr 2015
An Australian competition regulator said on Tuesday last week that he is very close to blocking a link between Qantas Airways and China Eastern Airlines. The two companies have agreed to synchronize their flights and other operations back in November last year.
Apparently, the reason for this move by the ACCC (Australian Competition and Consumer Commission) is fear that the tie-up between Qantas and China Eastern will impact the popular route between Sydney, Australia and Shanghai, China and even increase the price of fares on it.
In a press statement, the regulator said the link could lead to a "significant public detriment" by granting Qantas and China Eastern greater capacity and encouragement to reduce capacity and increase fares on the route between Sydney and Shanghai.
According to the chairman of The Australian Competition and Consumer Commission, mister Rod Sims, the watchdog is aware of the commercial reasons and potential benefits of the Qantas-China Eastern partnership, as the Australian company seeks to gain an entryway to Northeast Asia. However, he says, the regulator is worried that the two carriers have elected to enter this deal with their main competitor on the route.
Qantas and China Eastern are the only carriers who offer daily flights between Sydney and Shanghai. In addition, over 80 percent of the seats on direct flights on this route are booked with these airliners.
The two airliners have agreed that Qantas will use China Eastern's terminal in Shanghai. This will allow Qantas passengers to switch planes to connecting China Eastern flights much easier. In addition, the arrangement is likely to save money and time for both companies when it comes to processing passengers and cargo.
Before making their final decision about the Qantas - China Eastern link, the Commission will be seeking submissions until April 8 on the draft determination.