The Competition and Consumer Commission of Singapore (CCCS) is currently seeking public feedback on Emirates’ application to fully remove its capacity commitments in respect of the Singapore-Brisbane route. This comes as Emirates cited “overcapacity, declining revenues and rising costs” that have resulted in “substantial losses” on the particular route for its withdrawal.
The capacity commitments were undertaken by Emirates in relation to its alliance with Qantas Airways in 2013. The Emirates-Qantas alliance was first proposed in 12 October 2012 when CCCS received an application for a decision under section 44(1)(b) of the Act as to whether the proposed alliance infringes the prohibition under section 34 of the Competition Act. Section 34 of the Act prohibits agreements between undertakings, decisions by associations of undertakings or concerted practices which have as their object or effect the prevention, restriction or distortion of competition within Singapore. Based on information provided by Emirates and Qantas and third-party feedback during the public consultation, CCCS had found that price and capacity coordination between the two parties, in relation to two routes operated by them involving Singapore, would raise competition concerns.
As a result, both parties voluntarily undertook to maintain and under certain circumstances, to increase seat capacity on the flights operated by both parties for the overlapping routes, Singapore-Brisbane and Singapore-Melbourne, according to a statement on its website. The approval by CCCS allowed both airlines to coordinate various aspects of their flight services such as marketing, scheduling, planning, operating capacity, airport facilities and pricing.
In addition to Emirates and Qantas, Singapore Airlines is also operating four daily flights for the Singapore-Brisbane route. According to CCCS, should Emirates withdraw its service, there would be an approximately 16% decrease in the total number of seats available on the route. Qantas will continue to be subject to the capacity commitments and will continue supply at least 3,290 weekly seats on the route irrespective of the outcome of Emirates’ application, CCCS added.
With regards to the public consultation, CCCS would like to understand if and how Emirates’ proposed withdrawal from the Singapore-Brisbane route would affect interested parties. It is looking into areas such as ticket prices and seat availability of air passenger travel for direct flights between Singapore and Australia, as well as flights from Singapore transiting in Brisbane. CCCS also hopes to understand whether another airline might consider entering the route and any other positive or negative effects arising from the proposed withdrawal.
Given that the economic benefits from the capacity commitments on the Singapore-Brisbane route are part of the basis for approving the alliance, CCCS said in the statement that it will make an assessment of whether the alliance continues to benefit from the section 34 exclusion from the Act, notwithstanding Emirates’ withdrawal from this route.