The ACCC (Australian Competition and Consumer Commission) has denied authorization for a proposed joint business agreement between Qantas Airways and Japan Airlines.
The ACCC has confirmed in a final determination document on September 13, 2021, that it has decided to deny authorization for the proposed agreement as they considered “it would likely lead to reduced competition” once international travel returns.
The joint business agreement proposal was filed on December 18, 2020. The applicants, Qantas Airways Limited (Qantas) and Japan Airlines Co Ltd (JAL) included in their proposal an expanded codeshare relationship, optimized schedules on flights between Australia and New Zealand, streamlined processes for disruption management, coordination of pricing, schedules, sales and marketing to develop new travel products, among others.
Prior to the pandemic, Qantas and Japan Airlines together flew 85% of passengers traveling between Japan and Australia. The ACCC said that in addition to being the “closest competitors” to each other, on the Sydney to Tokyo route, they were also the only operating airlines serving the Melbourne to Tokyo route.
The proposed agreement–which would allow Qantas and JAL to coordinate fares and schedules–would make it very difficult for other airlines to operate on routes between Australia and Japan, the ACCC said.
“Virgin Australia told the ACCC that it would be more difficult to enter the Australia-Japan route if it is required to compete with Qantas and Japan Airlines acting jointly, rather than as individual competing airlines.”
A Cairns to Tokyo route was also pitched by Qantas after a negative draft decision was given by the ACCC in May. However, this too, was not approved, with the ACCC saying that the commission believes Qantas can independently service this new route on its own without need for an alliance, just like Jetstar, who will be resuming this route from February 2022.
“We’re obviously disappointed with this decision. A close partnership between Qantas and Japan Airlines would have meant more routes, better flight connections, and more benefits to frequent flyers,” Qantas Domestic and International CEO Andrew David said in an official online statement from Qantas and Japan Airlines regarding ACCC’s decision.
“Japan Airlines is also truly disappointed with the ACCC’s decision to disapprove our proposed joint business. We especially believed that the joint business with Qantas would have accelerated the recovery of Leisure and Business traffic between Japan and Australia, with clear economic and social benefits to both countries in the extremely challenging environment precipitated by the COVID-19 pandemic,” said JAL Executive Officer and Senior Vice President for Route Marketing Ross Leggett.
Qantas and Japan Airlines will continue their existing codeshare and Oneworld partnership.