ACCC blocks Qantas, Japan Airlines alliance

Qantas and Japan Airlines have today had their proposed alliance between Australia and Japan quashed by the Australian Competition and Consumer Commission (ACCC), which denied authorisation of the venture. The flagged deal would have allowed the airlines to stop competing on all aspects of price and service for three years.

The competition watchdog said the planned joint business agreement between Qantas and Japan Airlines would “likely lead to reduced competition as international travel resumes, to the detriment of passengers travelling between Australia and Japan”.

The primary route operated by the carriers is between Sydney and Tokyo.

“The ACCC can only authorise an agreement between competitors if it is satisfied the public benefits would outweigh the harm to competition. The alliance did not pass this test,” ACCC Chair Rod Sims said.

“Airlines have been severely impacted by the pandemic and this has been a very difficult period for them. But preserving competition between airlines is the key to the long-term recovery of the aviation and tourism sectors, once international travel restrictions are eased.”

“We accepted that there was likely to be some short-term benefits from the alliance being able to jointly reinstate services more quickly when borders are reopened, which may initially stimulate tourism. However, the longer-term benefits of competition between airlines are cheaper flights and better services for consumers, which is vital to the recovery of tourism over the coming years,” Sims noted.

In the year prior to the pandemic, QF and JAL operated about 85% of passenger traffic between the countries.

The ACCC said the alliance would make it difficult for other airlines to operate on routes between Australia and Japan, adding that a proposed new route flagged by Qantas in May between Cairns and Tokyo could still be operated without the alliance.

Lead image: Tokyo Haneda airport/ Credit: Markus Winkler from Pixabay