Watchdog backs Qantas alliance
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Watchdog backs Qantas alliance
Wed "The Australian"
Watchdog backs Qantas alliance
Steve Creedy, Aviation writer
February 09, 2005
VIRGIN Atlantic's attempt to torpedo the marketing alliance between Qantas and British Airways fizzled out yesterday when the competition watchdog ruled the agreement delivered an overall benefit to consumers.
The Australian Competition and Consumer Commission confirmed an August draft ruling and extended the 10-year-old price-fixing agreement for another five years.
The agreement allows Qantas and BA to co-ordinate scheduling, marketing, sales, freight and customer service on the kangaroo route to Europe.
Virgin had objected that the deal gave them an unfair advantage on the route, particularly in the corporate market.
The ACCC agreed that the agreement reduced competition in the UK-Australia business passenger market, where Qantas and BA held a 60 per cent market share.
It said this and constraints at London's Heathrow airport could provide barriers to market entry by new carriers and expansion by existing airlines. But it did not believe the alliance reduced competition in other business passenger markets, or in markets for leisure passengers, to Europe or South-East Asia.
ACCC chairman Graeme Samuel said he was confident that any detriment on the UK-Australia routes was outweighed by the benefits from cost savings, the availability of discount seats and schedule connections.
He said consumers in 2005 had more options for accessing European destinations using Asian carriers, through European carriers servicing mid-point hubs such as Singapore and through low-cost carriers in Europe.
It was clear from submissions there was strong price competition on the kangaroo route, particularly for leisure travellers, and the commission was satisfied this would continue.
"Where there is a competitive environment such as the one that exists in the joint services agreement markets, there is strong possibility that cost savings made by Qantas and BA under the JSA will end up, one way or another, in the hands of consumers," he said.
A Virgin Atlantic spokeswoman said the airline was "clearly disappointed" and was examining the decision.
Qantas executive general manager John Borghetti welcomed the decision and predicted the JSA would continue to deliver consumer benefits such as broader schedule and fare choices.
"We presented compelling material to the ACCC that there has been a significant increase in competition on the route, particularly from mid-point Asian carriers such as Singapore Airlines and Emirates," he said. "There has also been a substantial reduction in fares while service and product standards have increased."
Meanwhile, Singapore Transport Minister Yeo Cheow Tong said yesterday he was aiming for an open skies agreement with Australia within two years.
Mr Yeo told the Straits Times he hoped the countries could establish a road map for an open skies agreement when he met Australian Transport Minister John Anderson next week. He dismissed claims by Qantas chief Geoff Dixon that the Australian carrier did not compete on a level playing field and said half its flights into Changi Airport flew on to other destinations.
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Watchdog backs Qantas alliance
Steve Creedy, Aviation writer
February 09, 2005
VIRGIN Atlantic's attempt to torpedo the marketing alliance between Qantas and British Airways fizzled out yesterday when the competition watchdog ruled the agreement delivered an overall benefit to consumers.
The Australian Competition and Consumer Commission confirmed an August draft ruling and extended the 10-year-old price-fixing agreement for another five years.
The agreement allows Qantas and BA to co-ordinate scheduling, marketing, sales, freight and customer service on the kangaroo route to Europe.
Virgin had objected that the deal gave them an unfair advantage on the route, particularly in the corporate market.
The ACCC agreed that the agreement reduced competition in the UK-Australia business passenger market, where Qantas and BA held a 60 per cent market share.
It said this and constraints at London's Heathrow airport could provide barriers to market entry by new carriers and expansion by existing airlines. But it did not believe the alliance reduced competition in other business passenger markets, or in markets for leisure passengers, to Europe or South-East Asia.
ACCC chairman Graeme Samuel said he was confident that any detriment on the UK-Australia routes was outweighed by the benefits from cost savings, the availability of discount seats and schedule connections.
He said consumers in 2005 had more options for accessing European destinations using Asian carriers, through European carriers servicing mid-point hubs such as Singapore and through low-cost carriers in Europe.
It was clear from submissions there was strong price competition on the kangaroo route, particularly for leisure travellers, and the commission was satisfied this would continue.
"Where there is a competitive environment such as the one that exists in the joint services agreement markets, there is strong possibility that cost savings made by Qantas and BA under the JSA will end up, one way or another, in the hands of consumers," he said.
A Virgin Atlantic spokeswoman said the airline was "clearly disappointed" and was examining the decision.
Qantas executive general manager John Borghetti welcomed the decision and predicted the JSA would continue to deliver consumer benefits such as broader schedule and fare choices.
"We presented compelling material to the ACCC that there has been a significant increase in competition on the route, particularly from mid-point Asian carriers such as Singapore Airlines and Emirates," he said. "There has also been a substantial reduction in fares while service and product standards have increased."
Meanwhile, Singapore Transport Minister Yeo Cheow Tong said yesterday he was aiming for an open skies agreement with Australia within two years.
Mr Yeo told the Straits Times he hoped the countries could establish a road map for an open skies agreement when he met Australian Transport Minister John Anderson next week. He dismissed claims by Qantas chief Geoff Dixon that the Australian carrier did not compete on a level playing field and said half its flights into Changi Airport flew on to other destinations.
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Virgin slams ACCC
Thurs "The Australian"
Virgin slams ACCC
Steve Creedy, Aviation writer
February 10, 2005
VIRGIN Atlantic has launched a stinging attack on the competition watchdog for allowing Qantas and British Airways to continue a price-fixing agreement, saying the deal would be deemed illegal in other jurisdictions.
The Australian Competition and Consumer Commission on Tuesday approved the BA-Qantas joint services agreement (JSA) for a further five years after ruling it delivered an overall benefit for consumers. The deal allows the airlines to co-ordinate scheduling, marketing, sales, freight and customer service on the kangaroo route to Europe.
But Virgin Atlantic head of Asia-Pacific Mackenzie Grant yesterday labelled the agreement anti-competitive and said he could not believe the ACCC had renewed it without at least imposing conditions and limits.
He said the reasons for originally forming the alliance a decade ago no longer existed and the deal was pushing up prices in the business travel market.
"What they're actually doing is giving Qantas and British Airways immunity from prosecution for doing something that would be illegal in other aviation markets," he said.
"Certainly in Europe and the US, this would not be allowed - two carriers who have a dominant position being able to fix prices. It doesn't make any sense."
Virgin Atlantic began flying to Australia via Hong Kong in December and objected to the JSA because it thought the deal gave Qantas-BA an unfair advantage.
Mr Grant said he believed Virgin Atlantic had been the only airline to object to the agreement because it and Austrian Airlines were the only carriers still flying to Australia from Europe.
"All the other European carriers have long since stopped serving Australia and I believe the reason for that is partly due to the joint services agreement," he said.
Despite the unwelcome news, the Virgin executive said the airline's new Sydney route was going "quite well".
Virgin is flying two-class A340-600s on the route and has been pitching its generous sleeper beds, limousine service and in-flight bar to business customers.
"We're slightly ahead of where we'd thought we'd be at this point," he said.
"Two months into a new route is not a long way and usually we like to give the route six months to settle down before we comment, but certainly I can say it's going in the right direction.
"We've had a lot of support from the travel agent community in general in Australia and we also had some good consumer support. We're pretty pleased with the outcome."
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Virgin slams ACCC
Steve Creedy, Aviation writer
February 10, 2005
VIRGIN Atlantic has launched a stinging attack on the competition watchdog for allowing Qantas and British Airways to continue a price-fixing agreement, saying the deal would be deemed illegal in other jurisdictions.
The Australian Competition and Consumer Commission on Tuesday approved the BA-Qantas joint services agreement (JSA) for a further five years after ruling it delivered an overall benefit for consumers. The deal allows the airlines to co-ordinate scheduling, marketing, sales, freight and customer service on the kangaroo route to Europe.
But Virgin Atlantic head of Asia-Pacific Mackenzie Grant yesterday labelled the agreement anti-competitive and said he could not believe the ACCC had renewed it without at least imposing conditions and limits.
He said the reasons for originally forming the alliance a decade ago no longer existed and the deal was pushing up prices in the business travel market.
"What they're actually doing is giving Qantas and British Airways immunity from prosecution for doing something that would be illegal in other aviation markets," he said.
"Certainly in Europe and the US, this would not be allowed - two carriers who have a dominant position being able to fix prices. It doesn't make any sense."
Virgin Atlantic began flying to Australia via Hong Kong in December and objected to the JSA because it thought the deal gave Qantas-BA an unfair advantage.
Mr Grant said he believed Virgin Atlantic had been the only airline to object to the agreement because it and Austrian Airlines were the only carriers still flying to Australia from Europe.
"All the other European carriers have long since stopped serving Australia and I believe the reason for that is partly due to the joint services agreement," he said.
Despite the unwelcome news, the Virgin executive said the airline's new Sydney route was going "quite well".
Virgin is flying two-class A340-600s on the route and has been pitching its generous sleeper beds, limousine service and in-flight bar to business customers.
"We're slightly ahead of where we'd thought we'd be at this point," he said.
"Two months into a new route is not a long way and usually we like to give the route six months to settle down before we comment, but certainly I can say it's going in the right direction.
"We've had a lot of support from the travel agent community in general in Australia and we also had some good consumer support. We're pretty pleased with the outcome."
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Fair enough they had to have a go at the JSA, but I am really getting tired of Virgin whinging when they don't get thier way.
The Poms may not bore of Branson and co's continual 'the world is against us, we are just the little guy trying to get a fair break' chorus, but I think most Australians are beginning to de-tune.
Their reaction to the ACCC's decision will certainly win them no favours here.
The Poms may not bore of Branson and co's continual 'the world is against us, we are just the little guy trying to get a fair break' chorus, but I think most Australians are beginning to de-tune.
Their reaction to the ACCC's decision will certainly win them no favours here.
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These blokes know how to whinge don't they? So there are only two European airlines running to Europe. Big bloody deal. So how many other airlines are running there. Now let me see. Malaysian, Singapore, Thai, Cathay, Emirates, Gulf Air and probably one or two others. What are these pricks on about. "Oh, we're so hard done by that you'd better come and fly for us because we're the underdog and Qantas/BA are the baddies that will rip you off."
