Newsmakers
Qantas looks happily north after Jetstar Hong Kong is vetoed
September 1st 2015
August was a winning month for Qantas. A day after announcing a dramatic turnaround in profitability, to US$713 million for the latest fiscal year, the airline group’s CEO, Alan Joyce, received some news that put an even bigger smile on his face. Read More »
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Australia’s competition watch dog, the Australian Competition and Consumer Commission (ACCC), announced its approval of an alliance, for the life of five years, between Qantas and Shanghai-based China Eastern Airlines (CEA). The ACCC said the two airlines must boost capacity between the countries by 21% over the 60-month period and report fares on both carriers each month.
Chinese visitors are predicted to contribute up to $9 billion annually to the Australian economy by 2020, with analysts forecasting the alliance has the potential to match the benefits of the Flying Kangaroo’s partnership with Dubai’s Emirates Airline.
For Joyce, the news was especially sweet. Earlier this year, the ACCC said in a draft report that it would not approve the alliance. Its backflip is believed to be the result of lobbying from the Australian and Chinese governments.
The two airlines already have a reciprocal codeshare agreement on 17 flights a week between Australia and China and several onward domestic destinations in both countries. The alliance will enable the partners to deliver expanded services, better departure and arrival schedules, shorter transit times at Shanghai, increased frequent flyer benefits and a wider range of onward connections, Qantas said.
“The joint venture with China Eastern allows us to increase capacity between the two countries by linking to key hubs and offer connectivity to each carrier’s behind and beyond networks,” said Joyce. The business alliance was originally announced last November alongside the signing of the Australia-China Free Trade Agreement in Canberra.
A few weeks earlier, Joyce was not so happy. Speaking at an Australasian aviation summit in Sydney in August, he vented his anger at Hong Kong’s July decision to reject Jetstar Hong Kong’s application for an air operator’s certificate.
The decision to refuse Jetstar Hong Kong a licence to operate raised the real threat of governments “interfering in the markets and taking away fair competition”, he said.
