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Qantas and Japan Airlines’s Partnership Rejected
Qantas and Japan Airlines have suffered a setback as the Australian Competition and Consumer Commission (ACCC), the country’s competition watchdog, has denied the pair’s new joint business plan.
Last December, the airlines proposed an agreement which may optimize schedules on flights between Australia, New Zealand and Japan. According to Qantas, the new proposal can benefit the both airlines’ customers. Qantas customers would access 14 new codeshare destinations, allowing them to book Japan Airlines’ Business and Premium Economy classes. Japan Airlines customers may access 15 new codeshare destinations in Australia and New Zealand onboard Qantas. The proposal could also coordinate the pricing, schedules, sales and tourism marketing of flights to develop new and improved travel products, delivering more choices for customers.
In May, Qantas attempted to secure the deal by adding a new route connecting Cairns to Tokyo.
However, ACCC refused to give the green light to Qantas and Japan Airlines, worrying that it would hinder competition on routes between Australia and Japan, including for Virgin Australia, the main rival of Qantas.
ACCC said Qantas and Japan Airlines already had 85% of passengers traveling between Australia and Japan before the pandemic. Prior to the pandemic, both airlines have operated Sydney – Tokyo, Melbourne – Tokyo, while All Nippon Airways, the largest airline in Japan, also operated Sydney – Tokyo.
ACCC believed “some short-term benefits” could be seen from the alliance. “However, the longer-term benefits of competition between airlines are cheaper flights and better services for customers, which is vital to recovery of tourism over the coming years,” Rod Sims, ACCC chairman said.
In addition, the watchdog suggested that Qantas could commence Cairns – Tokyo without the alliance. According to ACCC, the new route is currently planned to start next February by Jetstar, Qantas’ no-frills airline.
Qantas is “disappointed” with the watchdog’s decision. “We know the recovery if the international travel is going to be slow and bumpy, so getting the policy setting right is going to be critical as key routes are rebuilt essentially from scratch. Getting that right will ultimately benefit the recovery of the Australian economy,” Andrew David, Qantas Domestic and International CEO, said in response to ACCC’s decision.
Earlier, the airline revealed its international travel could be reopened in December.
Regarding the new Cairns – Tokyo route, Qantas emphasized the new route is not viable without Japan Airlines’ extensive marketing research in Japan. Qantas also said this is a “particular unfortunate” for Queensland and Cairns, as the tourism hot spot would have benefited from a direct service to Tokyo.
Japan Airlines is also “disappointed” by ACCC’s decision. The second largest airline in Japan believed the proposal would have accelerated the recovery of leisure and business traffic between two countries. It could bring a “clear and social benefits to both countries in the extremely challenging environment precipitated by the Covid-19 pandemic,” Ross Leggett, Japan Airlines’ Executive Officer, Senior Vice President said.
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