This isn’t the start to her tenure that new Qantas Group CEO Vanessa Hudson would’ve wanted (though might have seen coming anyway) … the ACCC has moved to block continuing coordination between Qantas Group entities (including Jetstar) and China Eastern Airlines on Australian and mainland China routes.
Qantas and China Eastern are seeking to extend their joint co-ordination agreement that allows them to co-ordinate on passenger (and cargo) services until the end of March 2024.
But the Australian Competition and Consumer Commission (ACCC) says the partnership could breach competition laws and will only authorise these agreements “if the public benefits from the coordination outweigh the harm to competition”.
“We are concerned that the authorisation would provide Qantas and China Eastern with the opportunity and incentive to increase prices, compared to what they would charge absent the alliance, by limiting or delaying the introduction of additional capacity on the Sydney-Shanghai route as passenger demand continues to grow,” ACCC Commissioner Anna Brakey said.
Demand set to grow
Shanghai-based China Eastern is currently the only carrier flying nonstop between Sydney and China’s largest city, although Qantas plans to resume flights on the route next month.
The ACCC says air travel demand between Australia and China is also “likely to keep growing” before April 2024 as Chinese tourists return en masse down under.
“Any additional services on routes other than Sydney-Shanghai could potentially be a public benefit but we are not satisfied they are likely to eventuate between now and March 2024,” Brakey said.
“A key difference between now and the previous authorisations is we have not been provided with sufficient evidence that the coordination would lead to additional services on other routes between Australia and China.”
The ACCC has invited the two companies to make submissions on a transition to end authorisation by 6 October 2023, before it makes its final decision.
Just days ago, China Eastern revealed it would resume direct flights between Shanghai and Brisbane from 29 October.
According to RBC Capital Markets analyst Owen Birrell, the new development might put Qantas’ other partnership arrangements, especially with American Airlines and Emirates, at risk, Reuters reported.
Illegal sackings
The China news comes after the High Court last week ruled that the airline had acted illegally over the sacking of 1,700 ground crew members during the COVID-19 pandemic.
Following the decision, Qantas issued its first-ever apology to impacted workers.
“Qantas acknowledges and accepts the High Court’s decision to uphold two prior rulings by the Federal Court regarding the legality of outsourcing the remainder of the airline’s ground handling function in 2020,” it said in a statement.
“The Federal Court originally found that while there were valid and lawful commercial reasons for the outsourcing, it could not rule out that Qantas also had an unlawful reason – namely, avoiding future industrial action.
“The decision to outsource the remainder of the airline’s ground handling function was made in August 2020, when borders were closed, lockdowns were in place and no COVID vaccine existed.
“The likelihood of a years’ long crisis led Qantas to restructure its business to improve its ability to survive and ultimately recover.
“As we have said from the beginning, we deeply regret the personal impact the outsourcing decision had on all those affected and we sincerely apologise for that.”
In response to the decision, the Transport Workers Union (TWU) said “new directors including a worker representative” should replace the entire Qantas board, including chair Richard Goyder.
“The TWU has also called on new CEO Vanessa Hudson to publicly apologise to illegally sacked workers and commit to a speedy and non-adversarial approach to Federal Court hearings on compensation and penalties.”
