QANTAS and British Airways are to jointly operate on the kangaroo route for a further five years after the competition watchdog found the growth of midpoint carriers had further weakened the alliance’s anti-competitive impact.

The airlines’ 14-year-old joint services agreement allows them to jointly market, schedule and price on the route without fear of prosecution under the Trade Practices Act.

The Australian Competition & Consumer Commission found in a draft determination that strong competition on many of the routes operated under the agreement meant that costs savings were likely to be passed on to flyers and it was unlikely to result in any lessening of competition.

“The ACCC considers the JSA is likely to continue to deliver public benefits in the form of lower fares and broader availability of schedule options for air passengers,” ACCC chairman Graeme Samuel said yesterday.

The draft decision comes as BA has decided to cut back services to Sydney over the coming months. The financially troubled British carrier, which is embroiled in a union court challenge to proposed cuts to long-haul crew, will cut its daily Sydney-Singapore-London flights next month, citing weak demand. But it will continue to fly a daily service via Bangkok. The ACCC’s draft determination acknowledged that BA and Qantas had reduced capacity on some routes and cut schedules since the last authorisation in 2005.
But it said additional flight options had become available to consumers through the emergence of new mid-point carriers.

“While there may be some lessening of competition in the UK business passenger market, the ACCC considers that the extent of this detriment has reduced since the ACCC”s assessment of the JSA in 2005,” the determination said.

But the commission did not allow a request by the airlines that the current approval be unlimited, saying it did not consider it appropriate, given the dynamic nature of the aviation industry.

Meanwhile, Qantas announced yesterday it would base another Boeing 737-800 in Perth and increase capacity between the West Australian capital and the northwest resources towns of Karratha, Paraburdoo and Port Hedland to meet increased demand. The new schedule will see an additional 12 weekly services.
Source: the australian