Qantas and China Eastern have finally had the opportunity to welcome the Australian Competition and Consumer Commission’s (ACCC) authorisation of their joint business for a period of five years.
The joint business venture, which was announced in November 2014 alongside the signing of the Australia-China Free Trade Agreement, will see the airlines cooperate on services between the two countries.
Back in March, the ACCC said they were concerned with the proposed tie-up between the two carriers, as it would give the partners more than 80 percent of direct capacity between Sydney and Shanghai.
However, the ACCC has since granted permission for a five-year deal between the two carriers which will allow both Qantas and China Eastern to deliver expanded services, better departure and arrival schedules, shorter transit times and increased frequent flyer benefits on services between the two countries.
Qantas Group CEO, Alan Joyce said the ACCC’s final decision will help the airlines' to deliver a better travel experience for the growing number of customers travelling between the two countries while strengthening Australia’s connections with China; a key trading partner.
“We put a strong case to the ACCC that outlined the benefits of this partnership for travellers as well as Australian tourism and trade,” he said.
Over the next two years, China Eastern proposes to increase the frequency of its services on routes between Shanghai and Sydney, Melbourne Tullamarine and Cairns during peak periods and introduce year-round services on a new route.
To retain the five-year authorization for their joint venture, Qantas and China Eastern are required to increase their combined capacity on Shanghai-Australia routes by a compound annual growth rate of 4 percent.
“We cannot fly to every destination in China. However our deepened relationship with China Eastern supports our successful strategy to work with key partners around the world to offer the most comprehensive network and world class travel experiences for our customers,” added Alan Joyce.
“The ACCC considers that competition between Qantas and China Eastern for passengers travelling directly on the Sydney and Shanghai point to point route without onward travel will be greatly reduced under the alliance," said ACCC Chairman, Rod Sims. "This may provide them with the opportunity to increase prices for passengers travelling directly between Sydney and Shanghai,” he added.
In order to ensure that the carriers do not attempt to exploit their positions of dominance, the ACCC will require Qantas and China Eastern to report to it their average fares month by month, on every route each carrier offers between China and Australian.
China Eastern Chairman Mr Liu Shaoyong said the airline looks forward to working with Qantas under the enhanced partnership.
“We are very happy with the ACCC’s decision. Through this partnership we are helping to generate more tourism and trade opportunities with Australia and provide more convenient travel options for the many customers who travel between our two countries,” he said.
The two airlines currently have a reciprocal codeshare agreement on a total of 17 flights per week between Australia and mainland China, as well as a number of onward domestic destinations in both countries.