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In its second major concession to the ACCC in recent weeks, Qantas is ending its eight-year tie-up with China Eastern.
The joint venture, in place since 2015, will be wound up following signals from the competition watchdog last month that it would not extend its authorisation on the grounds that the deal would provide the “opportunity and incentive to increase prices”.
In a statement, Qantas said it and China Eastern had decided to walk away from the partnership despite the “significant benefits for customers and Australian tourism” it had provided.
“The airlines have commenced a process to unwind the joint business over the coming weeks, which includes an end to the coordination of pricing and schedules, and the removal of joint marketing material,” the statement read.
“To ensure there is no impact on customers, Qantas and China Eastern will honour all existing bookings, including the frequent flyer benefits and lounge access customers enjoyed under the joint business.
“China Eastern remains an important partner for Qantas. Our codeshare agreement will continue on routes between Australia and China which both airlines don’t operate, offering Qantas Frequent Flyers the opportunity to earn and redeem points on selected China Eastern flights.”
Qantas will proceed with plans to resume flights between Sydney and Shanghai on 29 October.
The move to ditch the China Eastern partnership follows Qantas’ decision last week to drop plans to buy FIFO operator Alliance, which had been blocked by the ACCC earlier this year for fear it would lessen competition in the resources sector.
While the two airlines maintained the deal would be a positive for the industry, they conceded in a joint statement that there was “no reasonable path forward” for the acquisition after the watchdog announced its opposition.
“Both companies believe the acquisition would have created customer value without lessening competition in the highly competitive resources sector – particularly through the efficiencies created through a combined fleet of F100 aircraft,” the statement read.
“Qantas will continue to serve the growing resources sector through its existing charter operations; it currently has around 27 per cent of the total charter market.”
