Proposed conduct between Qantas Airways Limited and Jetstar Airways Pty Limited in relation to the Jetstar Pan-Asia Strategy

Case Title

Proposed conduct between Qantas Airways Limited and Jetstar Airways Pty Limited in relation to the Jetstar Pan-Asia Strategy

Notifying Date:

6 August 2012

Notifying Parties:

The parties to the proposed conduct are:

a. Qantas Airways Limited;

b. Jetstar Airways Pty Ltd;

c. Newstar Investment Holdings Pte Ltd on its own behalf and on behalf of Jetstar Asia Airways Pte Ltd and Valuair Limited;

d. Jetstar Japan Co Ltd;

e. Jetstar Pacific Airlines Aviation Joint Stock Company;

f. Jetstar Hong Kong Limited (once established);

g. any other Jetstar branded low cost carrier that may be established in the future in Asia;

h. Japan Airlines Corporation;

i. Vietnam Airlines Company Limited; and

j. China Eastern Airlines Co., Ltd.

Summary of the nature and objective of the agreement

Qantas, with its wholly owned subsidiary, Jetstar Airways, seeks a decision from the Competition Commission of Singapore to allow coordination of the operations of each of Qantas, Jetstar Airways, existing Jetstar branded low cost carriers operating in Asia (namely Jetstar Asia, Jetstar Pacific and Jetstar Japan) and future Jetstar branded low cost carriers operating in Asia (namely Jetstar Hong Kong and other potential airlines). The coordination is proposed to include all network, scheduling, pricing, marketing, purchasing, customer service and resourcing decisions between the above airlines.

The purpose of the proposed conduct is to deepen the Qantas Group presence in the Asia–Pacific (a region characterised by unprecedented growth in demand for air travel) by expanding the Jetstar network in circumstances in which the international aviation regulatory environment makes it impossible for the Qantas Group to wholly or majority own airlines outside Australia.

Coordination of operations through a single brand, go to market strategy and business model will enable the coordinating parties to obtain the scale needed to deliver a lower cost base, which in turn will allow lower fares. Lower fares stimulate demand and lead to an increase in total services.

The proposed conduct is clearly pro-competitive and efficiency enhancing and will deliver significant benefits to Singaporean consumers in the form of more choice and greater access to lower fares and more destinations through the integrated Jetstar branded network.

The relevant services that are the subject of the application are the international air transportation of passengers and associated support activities.

"Please note that the summary of the proposed conduct is provided by the Applicants and does not reflect CCS' views towards the proposed conduct"

Decision

On 5 Sept 2013, CCS issued the parties with a Clearance Decision on their proposed alliance.

Please click here for the media release.