Aus watchdog shuts down partnership between fierce competitors Qantas and Japan Airlines

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The Australian Competition and Consumer Commission (ACCC) on Monday denied authorisation for a pricing, code-sharing and scheduling deal between Qantas Airways and Japan Airlines (JAL). According to the Australian competition watchdog, the partnership would likely lead to reduced competition as international travel is set to resume. The agreement would have allowed the two airlines to coordinate fare and schedules. Before the pandemic, Qantas and Japan Airlines together flew about 85% of passengers travelling between Australia and Japan. They were each other’s closest competitors on the largest route, Sydney-Tokyo, and the only airlines operating on the second largest route, Melbourne-Tokyo.

"Preserving competition between airlines is the key to the long-term recovery of the aviation and tourism sectors, once international travel restrictions are eased," said Rod Sims, chairman of ACCC. The ACCC also said that Virgin Australia said it would be more difficult to enter the Australia-Japan route if it is required to compete with Qantas and JAL acting jointly, rather than as individual competing airlines.

Qantas and JAL expressed disappointment with the ACCC decision in a joint statement, though they said they would continue their codeshare arrangements and oneworld Alliance partnership, according to Nikkei Asia. Qantas domestic and international chief executive, Andrew David, said that the decision was unfortunate for Cairns, because the planned Tokyo flights would not be commercially viable without the ability to coordinate with JAL. JAL senior vice president Ross Leggett said the joint venture with Qantas would have accelerated the recovery of leisure and business traffic between Japan and Australia.

However, Sims said that while there was likely to be some short-term benefits from the alliance being able to jointly reinstate services more quickly when borders are reopened, the longer-term benefits of competition between airlines are cheaper flights and better services for consumers, which is vital to the recovery of tourism over the coming years. According to Nikkei Asia, Japan's ANA Holdings is the only other airline that flies non-stop between Japan and Australia.

According to Japan Times, Qantas reported last month that revenues had fallen US$9 billion in the last financial year as travel dried up. The airline had received over a billion dollars in taxpayer aid and had dismissed thousands of workers.

Separately, Malaysia Airlines (MAB) and JAL entered a joint business partnership last year, cooperating on commercial flights between Malaysia and Japan. The initiative was said to enable the two airlines to enhance capabilities and leverage on each other’s strengths, combining JAL’s service and offerings with MAB’s hospitality. At the same time, both airlines said in a statement that they have adjusted to the “new normal” with modifications to offerings on ground and onboard, as well as processes and procedures from check-in, boarding and arrival to uphold safety and health standards.

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