China Eastern planing extra flights to Australia if alliance with Qantas gets ACCC approval

written by australianaviation.com.au | June 16, 2015
AIRBUS A330 300 CHINA EASTERN MEL FEB12 RF IMG_2741
A China Eastern Airbus A330-300 at Melbourne Airport. (Rob Finlayson)

China Eastern has flagged launching second daily Sydney-Shanghai and Melbourne-Shanghai services if its proposed partnership with Qantas secures regulatory approval.

The Australian Competition and Consumer Commission (ACCC) is currently considering an application from Qantas and China Eastern for a partnership covering flights between Australia and China.

The competition regulator has indicated in a draft determination it was inclined to block the tie-up, arguing it the two carriers would have an incentive to restrict capacity and increase fares on the Sydney-Shanghai route, which is dominated by Qantas and China Eastern.

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The draft determination has met with a strong response from both the Australian government (through a submission from the Department of Infrastructure and Regional Development) as well as the Chinese, whose ambassador to Australia wrote a letter to the ACCC arguing the benefits of the alliance. Tourism bodies have also written to the ACCC to express their wish the tie-up is approved.

Currently, China Eastern flies daily to Shanghai from both Melbourne and Sydney.

In their latest filing to the ACCC, the parties said China Eastern would launch an extra three flights a week on Sydney-Shanghai and Melbourne-Shanghai from September, before moving to a double daily schedule on both city pairs by November.

Moreover, China Eastern proposed new seasonal Cairns-Shanghai flights from January 2016, although no frequency information was provided. And the submission also mentioned the previously raised prospect of a new Perth-Shanghai service some time in the future.

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The parties said the alliance gave China Eastern an incentive to add more capacity to Australia, given it would enable the Chinese flag carrier to “build on Qantas’s domestic business and frequent flyer proposition by accessing high-yielding Australian domestic corporate and government travellers”.

“It will give China Eastern’s worldwide sales force better access to sell to and from Australia, particularly by being able to offer more seamless travel to secondary and regional cities served by Qantas,” the submission said.

“The proposed conduct will facilitate and expedite the deployment of additional capacity to Australia. It will also make capacity increases more sustainable.”

And Qantas, which has one daily flight from Sydney to Shanghai – its sole destination in mainland China – would also consider adding new services.

“Over time, if the proposed conduct proceeds, Qantas would potentially explore opportunities to introduce new services to China,” the submission said.

The proposed second daily service would leave Australia in the evening to give customers more choice, given both Qantas and China Eastern’s current flights departed Australia in the morning.

“In the absence of the proposed conduct, this capacity expansion will not occur,” the submission said.

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