Oneworld member airlines British Airways (BA) and Qatar Airways (QR) have sought approval from the Australian competition regulator to coordinate air services on nine offline routes between Australia and the United Kingdom.
BA and QR currently coordinate air passenger services on the London-Doha trunk route, Edinburgh-Doha and Manchester-Doha under an existing Joint Business Agreement (JBA). That partnership is aimed at making them competitive against rival Gulf carriers – Emirates, Etihad Airways and Turkish Airlines – as well as the other airline global alliances, SkyTeam and Star Alliance.
The carriers now plan to work together on over 80 routes behind and beyond (B&B routes) their hubs of London and Doha.
Their JBA covers elements such as schedule coordination, capacity, revenue planning, joint pricing, sales, marketing, frequent flyer programs and more.
The proposed new offline routes are between four Australian cities and the UK, operating via Qatar Airways’ home port of Doha. The Australia-Doha leg of the routes is operated by Qatar Airways. (British Airways also has codeshare relationships to Australia through Qantas and/or QR. The English airline is also partially owned by Qatar Airways).
The B&B routes in question are: Adelaide-London, Melbourne-London, Perth-London, Canberra-London, Adelaide-Manchester, Melbourne-Edinburgh, Perth-Edinburgh, Melbourne-Manchester and Perth-Manchester.
In their submission to the Australian Competition and Consumer Commission, the applicants said “BA and Qatar, through the arrangement, aim to provide customers with greater choice across a greater number of routes which will in turn increase traffic and possibly capacity over time on the trunk route.”
Existing competitors on Australia-UK/Europe route
In their redacted application, the duo noted the Australia-UK/Europe route “is characterised by highly competitive behaviour that will not be lessened in any way as a result of the Proposed Conduct.”
“This route is characterised by large, well-established carriers like Emirates, Etihad and Qantas. These carriers not only have large market shares individually, but through a number of codeshare and authorisation arrangements have collectively made it very difficult for individual carriers to compete effectively.
“The Parties expect that competitors will continue the pro-competitive initiatives they have in place, including by taking advantage of efficiencies and enhanced offerings enabled by the creation of alliances.”
Furthermore, the UK and Qatari airlines said the alliance between Qantas and Emirates has provided QF customers with “greater choice and flexibility of schedules in flying to the UK and Europe”. The oneworld allies also noted the partnership between Virgin Australia and Etihad Airways had seen that strategic alliance broaden its codeshare and interline destinations to 80, spanning Africa, Australia, Europe and the Middle East.
Similarly, air services by Singapore Airlines, China Southern, China Airlines and the new Virgin Australia/Virgin Atlantic arrangement were also mentioned as competition.
BA and QR say their proposed cooperation on the Australia-UK/Europe route will have benefits to the public by increasing competition that “will likely trigger a competitive response from other airlines” and lead to lower airfares.
The applicants are seeking a five-year authorisation (until 2025) for the cooperation and have also sought interim authorisation as soon as possible to kick-start the partnership.
The ACCC is accepting submissions on the arrangement until 30 January 2020, and expects to hand down a final decision in April/May 2020.