Qantas & British Airways Restated Joint Services Agreement

Case Title

Qantas & British Airways Restated Joint Services Agreement

Notifying Date

24 April 2006

Notifying Parties

The parties to the Agreement are:

1. Qantas Airways Limited ABN 16 009 661 901 (‘Qantas’) ; and

2. British Airways Plc Registration No 1777777 (‘British Airways’).

Summary of the nature and objective of the agreement

Qantas and British Airways (together ‘the Applicants’) are parties to the Joint Services Agreement (‘Agreement’) which has been in operation since 1995.

This Agreement allows Qantas, British Airways and their subsidiaries to co-ordinate scheduling, capacity, prices, yields and marketing on all routes, including between Australia and Europe, Australia and Asia and Asia and Europe.

In Asia, Singapore is the primary hub through which the Applicants operate a large number of their services. Given this, the Applicants’ conduct in Singapore encompasses:

1. co-ordination of fares and marketing arrangements for air passenger services sold in Singapore for travel on the routes to Australia and Europe; and

2. co-ordination of capacity and the management of passenger flow on services between Singapore and Australia, and Singapore and Europe.

The Applicants claim that the Agreement meets the Net Economic Benefit exclusion criteria set out under the Third Schedule to the Act, as there are positive economic effects to Singapore and its consumers, with no indispensable restrictions or elimination of competition. The Applicants, therefore, apply for a Decision from the CCS that the Agreement does not infringe the section 34 prohibition.

There are no goods involved. The services involve passenger air services, which are the principal focus of the Application. The Agreement also relates to air freight services and sale of air travel services, but there are no appreciable effects in those markets.

Decision

The Commission has concluded that the Agreement between the Applicants is likely to have the effect of appreciably preventing, restricting or distorting competition in the provision of scheduled air passenger transport, but is excluded under section 35 of the Act pursuant to paragraph 9 of the Third Schedule to the Act because there are net economic benefits.

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