Qantas and China Eastern Airlines have been granted interim authorisation by the Australian Competition and Consumer Commission (ACCC) for an extended Joint Coordination Agreement (JCA) enabling the carriers to continue to coordinate operations between Australia and mainland China until March 2022.
An extended JCA, as previously reported by LATTE, was proposed by Qantas and China Eastern in consideration of the impact and “market uncertainty” between the countries caused by the COVID-19 pandemic.
The aviation partners’ previous authorisations were due to expire on 31 October 2020. The 18-month reprieve will offer the airlines a level of certainty until they seek a further extension beyond 2022.
The ACCC said interim authorisation would allow Qantas and China Eastern to continue their cooperation in which they have been engaged for the past five years, which among other factors included improved schedules, frequencies and connection times.
“The ACCC considers it unlikely that interim authorisation would have any significant impact on the status quo,” the regulator said while adding it was concerned about a possible reduction in competition between the duo on the Sydney-Shanghai route – a city pairing where they are each other’s closest competition.
“The ACCC recognises that due to current travel restrictions the market conditions in which the alliance will operate, at least over the 18 months for which reauthorisation is sought, will be substantially different. In particular, demand for services is likely to be significantly lower than historical levels over that period. This impacts the assessment both the public benefits and public detriments likely time result from the Proposed Conduct over the period for which reauthorisation is sought.”
It added that there would likely be public benefits if the alliance was maintained and that there would be a greater disruption and costs associated with winding back the existing arrangement if interim authorisation was denied.
Public consultation on the JCA is expected to be carried out during October, and a final determination on the extended alliance is slated before the end of the year.
Lead image: Shanghai, courtesy of Kuloser from Pixabay.