Qantas and Air Niugini have won a partial victory in their request for an expanded codeshare agreement on Australia-Papua New Guinea routes.
Australia’s International Air Services Commission (IASC) has approved the arrangements between the two carriers to codeshare on the Sydney-Port Moresby route (operated by Air Niugini) and Brisbane-Port Moresby route (operated by both Qantas and Air Niugini).
The approval is only until June 30 2018, with the IASC saying it would monitor market conditions closely to assess the impact of the new codeshares.
Further, the Cairns-Port Moresby route operated by Air Niugini was not included in the IASC’s draft decision, dated October 20.
In July, Qantas announced plans to end flights between Cairns and Port Moresby, operated by QantasLink Q400 turboprops, and launch a daily Brisbane-Port Moresby service with Boeing 737-800s.
The change, which Qantas said was to better serve the business market, took place on Sunday October 30.
On September 5, Qantas applied to the IASC to codeshare on the Air Niugini’s Cairns-Port Moresby service as part of an updated agreement to reflect the Australian carrier’s network changes to Papua New Guinea. Qantas and Air Niugini would also codeshare on each other’s Brisbane-Port Moresby service, while Qantas would maintain its codeshare on the PNG carrier’s Sydney-Port Moresby flights.
Virgin Australia in its submission to the ISAC called for the codeshare agreement to be rejected, describing it as the “single most significant barrier to entry on the PNG route”, adding it would not benefit the public.
Meanwhile, Air Niugini told the IASC it may have been forced to withdraw from Sydney and downgrade its Brisbane flights from widebody to narrowbody aircraft without the support of Qantas as a codeshare partner.
The IASC said it was “difficult to come to conclusions about likely outcomes” on the market with and without the codeshare.
“The Commission, therefore, would like to have the opportunity to see how the new arrangements work in practice on those city pairs on which the airlines are currently codesharing,” the IASC said.
“In particular, the Commission is concerned that Virgin Australia, without the ability for its alliance partners to codeshare on its Brisbane services, will be competing with the combined marketing power of Qantas and Air Niugini code sharing on each other’s flights.”
“Accordingly, the Commission proposes to approve the free sale codeshare arrangement for a trial period on the Brisbane and Sydney sectors. This will allow the Commission to thoroughly assess the competitive impact of the codeshare on the city pair sectors that are of most concern to Virgin Australia, before deciding whether to approve the codeshare for a longer period and to broaden the approval to include the Port Moresby-Cairns sector.”
The IASC said it would conduct a review of the market after 12 months of traffic and financial data up to December 31 2017 became available to assess the impact of the codeshare arrangements on Virgin’s Brisbane services and on competition on the route in general.