Qantas has dropped plans to expand a codesharing arrangement with Air Niugini on Australia-Port Moresby routes.
Australia’s International Air Services Commission (IASC) said in a statement on May 17 Qantas has withdrawn its application to maintain codesharing with Air Niugini on the Brisbane and Sydney to Port Moresby routes and add flights from Cairns and Townsville to the PNG capital to the arrangement.
“On 15 May 2017, Qantas withdrew its application to permit the use of its capacity allocation on the Papua New Guinea route for code share services with Air Niugini,” the IASC said on its website.
In February, Qantas sought to continue existing arrangements where the two carriers codeshare on the Sydney-Port Moresby route (operated by Air Niugini) and the Brisbane-Port Moresby route (operated by both Qantas and Air Niugini).
Further, the application to the IASC also requested approval to add Qantas’s QF code on Air Niugini’s nonstop Cairns-Port Moresby and Townsville-Port Moresby services.
However, the IASC said in a draft ruling in early May it proposed to reject the airline’s application after considering it “would not be of benefit to the public”.
“The Commission’s finding is that Qantas’s proposed free-sale codeshare arrangement with Air Niugini would reduce competition by increasing barriers to entry on the city pairs served only by Air Niugini (Cairns-Port Moresby, Sydney-Port Moresby, Townsville-Port Moresby) and by risking the withdrawal of Virgin Australia from the Brisbane-Port Moresby sector, where both Qantas and Air Niugini offer parallel services,” the IASC draft determination said.
The Qantas application was vigorously opposed by Virgin Australia, which is the only other airline offering nonstop flights between Australia and PNG.
Virgin Australia said in its submission to the IASC the proposed codeshare was the “single most significant barrier to entry on the PNG route”.
The airline recently reduced its Brisbane-Port Moresby service with Boeing 737-800 equipment to five flights a week, from six a week previously and figures in the IASC draft ruling shows the airline has lost market share, both for passengers carried and capacity, on the route.
The IASC draft determination said its assessment of the passenger data showed that the “re-entry of Qantas in its own right on the Brisbane-Port Moresby sector, when supplemented by a free-sale code share with Air Niugini, has changed the competition dynamics between the airlines”.
“If Virgin Australia’s position is further weakened by the continuation (and expansion to other routes) of the codeshare arrangement between Qantas and Air Niugini, the Commission sees a risk that Virgin Australia may exit the sector, leaving only Air Niugini and Qantas operating as partners under a codeshare arrangement,” the IASC draft decision said.
“In the absence of operations by Virgin Australia, there would be a substantial lessening of competition on the sector.”
The IASC allowed Qantas and Air Niugini to codeshare on the Brisbane-Port Moresby and Sydney-Port Moresby route in October 2016.
However, the approval was only until June 30 2018, with the IASC saying at the time it would monitor market conditions closely to assess the impact of the new codeshares. Further, Cairns-Port Moresby was not included in the IASC ruling. Since the decision, Air Niugini launched Townsville-Port Moresby in April 2017.