ACCC plans to knock back Qantas & Japan Airlines route

Company News

by Melissa Darmawan

The ACCC is planning to knock back the plan for Qantas (ASX:QAN) and Japan Airlines to coordinate flights as the watchdog claims it breaches competition laws. The airlines announced in December last year to form a partnership to service flights between Australia, New Zealand and Japan to support the tourism industry for three years under a proposed five year joint business agreement.

“An agreement for coordination between two key competitors breaches competition laws. The ACCC can only authorise these agreements if the public benefits from the coordination outweigh the harm to competition,” ACCC Chair Rod Sims said. “At this stage we do not consider that Qantas and Japan Airlines’ proposal passes that test.”

Before the covid-19 pandemic, Qantas and Japan Airlines were the only two airlines offering direct flights between Melbourne and Tokyo. They were also two of only three airlines, the other being All Nippon Airways, offering direct flights between Sydney and Tokyo.

“The airline and tourism sectors have been severely impacted by the COVID-19 pandemic. Protecting competition in the airline industry is critical to ensuring recovery in the tourism sector, once international travel restrictions ease,” Mr Sims said.

“This proposed coordination would appear to undermine competition significantly by reducing the prospect of a strong return to competition on the Melbourne – Tokyo and Sydney – Tokyo routes when international travel resumes.”
The ACCC is seeking submissions from interested parties in response to this draft by 27 May 2021.

Shares in Qantas are trading 2.29 per cent lower at $4.70.

 

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