Flying high on the back of “the best six months in the history of Qantas”, Qantas has been implementing strategies to continue its growth.
Earlier this year, Qantas submitted an application to the Australian Competition and Consumer Commission (‘ACCC’), seeking approval to team up with their closest competitor in the Sydney ←→ Shanghai route: China Eastern Airlines.
On 21 August 2015, the ACCC granted conditional authorisation.
Here is what you need to know:
1. The ACCC initially considered denying authorisation.
An alliance could potentially harm the public more than benefit it. For example, if Qantas and/or China Eastern decide to raise prices, the consumer will be left with less choice and higher fare prices.
2. What are the benefits?
This agreement will enable quicker and more convenient connections for Qantas passengers onto China Eastern flights in shanghai, and vice versa. Timing between flights can be coordinated, which will reduce transit waiting times.
3. This authorisation comes with strict conditions (21-pages worth).
Among other things, Qantas and China Eastern have to report their average fares for each of their routes between Australia and China monthly to the ACCC. Further, both airlines have committed to increasing their combined capacity on routes between Shanghai and Sydney.
The authorisation is only valid for 5 years, and if the airlines want to continue this alliance, they would need to reapply. This enables ACCC to scrutinise the effects of the alliance and decide if a continuation of the alliance would benefit the public.
From 2014-2015, China was the second-largest source of short-term visitors to the land Down Under, with 933,700 people enjoying a taste of the Aussie culture. This alliance will continue to boost Australia’s tourism, and make it easier for us to share our beautiful country.
To read more on the Qantas and China Eastern alliance, visit ACCC.
Let us know what you think about this alliance on social media by adding #lawpath or tagging us @lawpath. Keep an eye out on the LawPath blog for any updates.