The competition watchdog has given the all clear to a tie-up between Qantas and China Eastern after originally proposing to block the deal. The Australian Competition and Consumer Commission said it had decided to approve the agreement subject to key conditions, allowing the airlines to coordinate schedules and pricing between Australia and China.
The ACCC had in March proposed blocking the deal, but said today that the airlines had provided commitments to add additional flights and destinations between Australia and China if the alliance was permitted.
ACCC chairman Rod Sims said the expanded services would constitute "a significant public benefit".
It's the second day of good news for Qantas, after the airline yesterday logged a net profit of $557 million for the 2015 financial year, a strong turnaround from the previous year's $2.843 billion loss.
The ACCC cleared Qantas and China Eastern's agreement for a five year period, but the deal comes with strict conditions that will be subject to review.
Over the next two years China Eastern plans to increase the frequency of its services on routes between Shanghai and Sydney, Melbourne and Cairns during peak periods and introduce year round services on a new route.
Meanwhile, Qantas and China Eastern also proposed to significantly expand the range of destinations covered by their existing code share agreement.
The ACCC said the co-location of Qantas with China Eastern at terminal 1 at Shanghai's Pudong airport will benefit consumers with more convenient and quicker connections, reducing travel times.
"Qantas and China Eastern say that their primary focus in forming the alliance has been to establish a gateway through China Eastern’s Shanghai hub for connecting services between Australia and China. Doing so should result in significant expansion in their services between Australia and China," the ACCC said.
Qantas and China Eastern are required to grow their capacity on routes between Australia and China Eastern’s hub in Shanghai by 21 per cent over five years.
Qantas and China Eastern forged the alliance deal in November. However, the deal appeared in peril when the ACCC subsequently found the pair account for more than 80% of seats flown between Sydney and Shanghai, potentially allowing them to limit flying capacity and increase fares on the route. In a draft decision in March, the ACCC said it wanted to block the deal, but invited further submissions before making its final call.(aerotime)
