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QANTAS & CHINA EASTERN: Interim approval to continue existing co-ordination agreement

QANTAS & CHINA EASTERN:  Interim approval to continue existing co-ordination agreement

The two airlines have been co-ordinating since 2014 on operations that would usually be ruled as potentially anti-competitive if not for the authorisation from the ACCC (Australian Competition and Consumer Commission).

This ruling gives Qantas and China Eastern permission to continue operating as they are while the ACCC considers its final ruling. It’s similar to the interim authorisation given to Qantas and Emirates earlier this month

The original application for this extension was lodged back in December 2022, with a slight amendment notified in February of 2023, advising the commission that it wasn’t too fussed if they didn’t give it immunity from section 47, which covers ‘exclusive dealing’. Its basically what the packet says – or as the ACCC describes it in non-legal language:

For example, a purchaser refuses to buy from a supplier unless the supplier agrees not to supply the purchaser’s competitors.

ACCC website

Just in time – post-pandemic Chinese lockdown

The application sought to extend the agreement between the two airlines from 1 April 2023 for 12 months to restart their flight and cargo agreements which had effectively been suspended when China closed its borders due to the COVID-19 pandemic.

Qantas argues that the coordination agreement provides a better framework for reinstating ‘sustainable network building’ if the two airlines can co-ordinate by codeshare, frequent flyer reciprocity, customer service integration, sharing their access to inventory and a range of other arguments. You can scour the submission (head for page 7, where the substantive submission starts) for all the other details.

China Eastern First Class [China Eastern]

2PAXfly Takeout

Qantas and China Eastern Airlines have only sought a 12-month authorisation, not because they don’t think they will need the authority of the ACCC to indulge in what would otherwise be considered anti-competitive practices, but because they want to get reciprocal flights off the ground, and once that is achieved, they will work out the long term nature of their co-ordination needs.

With agreements approved by the ACCC dating back to 2014, I don’t think Qantas or China Eastern will want to ditch their coordination any time soon. Look out for another application in 2024.

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