China Wants ACCC on Board the Qantas-China Eastern Deal

2nd Jun 2015

As the ACCC (Australian Competition and Consumer Commission) ponders what to do with the Qantas-China Eastern alliance, pressure is piling on them from all sides. The latest to do so is the Chinese government itself.

"New Momentum for out Aviation Cooperation", Says Zhaoxu

The Chinese ambassador in Australia, Mr. Ma Zhaoxu, has written to the ACCC, expressing his concern about the "ongoing review of the proposed deeper alliance between Qantas and China Eastern."

In his letter, addressed to the ACCC Chairman Rod Simms, Zhaoxu also urged the regulator to "bear in mind the interests of our overall relationship and make a fair and reasonable decision."

The Chinese ambassador pointed out that the air market between the two countries is growing at a rapid state, so this deal would infuse a 'new momentum into our aviation cooperation by meeting the growing demand for international travel. It will not reduce completion or lead to monopoly, but rather serve the interests of consumers', Zhaoxu wrote.

Finally, Zhaoxu also underlined that the two carriers signed the agreement in front of both the Prime Minister of Australia Tony Abbott and the President of China Xi Jimping in Canberra last November.

"The Alliance Brings a Worthy and Desired Outcome", Dixon (Tourism Australia)

Meanwhile, Tourism Australia chairman Geoff Dixon also told the ACCC that this body supports the Qantas-China Eastern alliance because of the increase in the number of visitors from China it could bring.

Dixon said:

"Improved access to Australia for Chinese visitors through increased air services' is a worthy and desired outcome."

The ACCC is worried that the agreement between the two airlines could lead to a monopoly on certain routes. One route, that between Sydney and Shanghai, is of particular concern, as would give to two carriers an 80 per cent capacity share, leaving only scraps for the other companies.

The ACCC faces other opposition as well. Recently, the Australian Department of Infrastructure and Regional Development said it sees "no reason to deny approval" for this alliance. Also, the AIPA (Australian and International Pilots Association) said that the commission "leans for too heavily on what is ?possible? rather than what is actually 'likely'".