Qantas critical of draft decision on Papua New Guinea codeshares

written by australianaviation.com.au | November 9, 2016
BOEING 737 800 AIR NIUGINI SYD MAR13 RF 5K5A1137
A file image of an Air Niugini Boeing 737-800 at Sydney Airport. (Rob Finlayson)

Qantas has called on the Australia’s International Air Services Commission to (IASC) to reverse course and approve in full its proposed codesharing arrangements with Air Niugini on Australia-Papua New Guinea routes.

In October, the IASC said in a draft decision the two carriers would be able 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 would be only only until June 30 2018, with the IASC saying it would monitor market conditions closely to assess the impact of the new codeshares in what it termed a “trial period”.

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Further, the Cairns-Port Moresby route operated by Air Niugini was not included in the IASC’s draft decision.

Qantas said in a submission to the IASC it was not practical to segment the market in the manner the IASC proposed.

“The Qantas and Air Niugini proposal is predicated on a whole of market, package proposition which reflects the circumstances and reality of this market and is premised on the proposal being approved in its entirety,” Qantas said in its response to the draft decision.

“We request the Commission review the draft decisions and authorise the code share in its entirety, including Cairns-Port Moresby (Cairns sector) for the duration of the relevant Determinations.

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“The Commission’s draft decisions do not, in our view, establish a case for ‘serious concerns’ as described by the policy statement. Importantly the Commission has not demonstrated that it has satisfied itself that the requested aviation would not be of benefit to the public.”

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.

The airline 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.

The codeshares would be on a free sale basis, where both carriers, independent from the other, set their own prices, set their own fare classes and rules, operate independent yield management systems and sell through independent sales networks. Each carrier had access to the “whole seat inventory”. Decisions on routes and frequencies are made independent of each other.

Qantas said if its proposed codeshare met the criteria and was deemed to be of benefit to the public, then the approval should not be for just a trial period.

Further, the company described the draft decision as a “desire of the Commission to move away from its guidelines and conduct an experimental workshop which contradicts the intent in the Minister’s Policy Statement”.

“The IASC draft decisions support a puzzling proposition whereby a monopoly provider on the Cairns sector presents a better public benefit outcome than the addition of Qantas’ presence as a fully independent code share partner,” Qantas said.

“The Commission then proposes to base a future assessment of whether to approve the code sharing on the Cairns sector on the performance of two different routes (the Sydney and Brisbane sectors) which have their own specific dynamics, route economics, operators and competitors.”

“This approach is illogical and inconsistent with the IASC framework which provides for criteria for the Commission to make a decision.”

Virgin Australia, which flies between Brisbane and Port Moresby with Boeing 737-800s six times a week, had called on the IASC to reject the arrangements.

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5 Comments

  • ONE PNG

    says:

    All stakeholders must consider the impacts on the travelling publich in making decisions in such arrangements. .

  • Roman

    says:

    Is the government doing this to discourage airlines from pulling out? It was Qantas that chose to pull out and not operate a Cairns service.
    I agree that as AirNiugini chose to operate this service they should be able to charge what they want. The question is how much more seats would they fill if they code-share with Qantas.
    I know this is unconventional but why don’t they code-share with both Virgin and Qantas? This would eliminate the lack of competition argument and fill the plane.

  • Fred

    says:

    Good job IASC. The big companies think no one will notice the unfairness for PNG and Cairns flyers.

  • Freddie

    says:

    Any flights to Port Moresby are very lucrative. Rarely is there a ‘sale’ on these fares. I feel there is enough for the code sharing between all carriers.

  • Vannus

    says:

    Typical govt hamstringing the Airlines!

    Pull ya bee finger out public servants’, & let the Airlines be able to do what THEY do best, ie carry passengers’ to wanted destinations’……….

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