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ACCC says Qantas and China Eastern can still work together

written by Adam Thorn | March 31, 2023

Rob Finlayson shot this China Eastern 777-300ER in November 2016.

The Australian Competition and Consumer Commission (ACCC) has extended its authorisation for Qantas and China Eastern to collaborate on flights between their home countries.

The current tie-up between the two airlines was due to end on 31 March 2023 and was last approved in 2021.

Back then, the ACCC removed a key condition that prevented the two carriers from working together to service flights between Sydney and Shanghai due to the effects of COVID-19.

The organisation said the decision would result in a public benefit by assisting the two businesses to reinstate flights and grow capacity more quickly as travel restrictions ease.

“The ACCC also considers that as travel between Australia and China resumes, the extended Joint Coordination Agreement is likely to result in public benefits by assisting the applicants to provide an expanded range of destinations on a single ticket, improve connectivity, provide shorter journey times, and provide a wider range of loyalty program benefits,” it said in its final 2021 decision.


Previously, the pair were banned from cooperating on the Sydney–Shanghai route, which they both operated, as it accounted for 23 per cent of all travel between China and Australia.

“Qantas and China Eastern were each other’s closest competitors on the Sydney–Shanghai route, each was likely to be the other’s most significant competitive constraint on the route, and the ACCC considered that this competition was likely to be lost under the alliance.

“The ACCC considered that this would provide Qantas and China Eastern with the ability and incentive to unilaterally reduce capacity, or limit growth in capacity, to increase prices on this route.

“To address this concern, the ACCC imposed conditions of authorisation requiring Qantas and China Eastern to maintain at least an aggregate base level of capacity across routes between Shanghai and Australia and on the Sydney–Shanghai route.

“Qantas and China Eastern were also required to grow capacity in aggregate across routes between Shanghai and Australia over the term of the authorisation by a compound annual growth rate of 4 per cent.

“The conditions of authorisation also required Qantas and China Eastern to provide specific data to the ACCC at the end of each scheduling season, including data about capacity added, passengers flown, and average fares on each route between Australia and China on which they operated services.”

The ACCC said the current renewal is only an ‘interim authorisation’ and added it “should not be taken as an indication that the final authorisation will be granted”.

It comes shortly after the ACCC also granted permission for Qantas and Emirates to continue coordinating their flight schedules.

The arrangement between the two airlines was first agreed upon in 2013 but was due to expire on 31 March 2023. The pair are ultimately seeking to extend it for another five years.

Qantas chief executive officer Alan Joyce in 2021 called the partnership one of “the most significant” in aviation.

“The international aviation market will take years to fully recover so close collaboration between airline partners is going to be more important than ever,” he said.

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