Qantas bows to ACCC wishes and ends China Eastern tie-up

For the second time in a week Qantas has opted not to fight the competition watchdog, as a former airline executive calls for greater protection for the national carrier.

Qantas and China Eastern are unwinding their joint business after opposition from the competition watchdog.

For the second time in a week, Qantas has raised the white flag in matters involving the competition watchdog, making the decision to abandon its eight-year-old partnership with China Eastern Airlines.

The Australian Competition and Consumer Commission issued a draft determination last month indicating it would oppose the renewal of the joint business on the basis it was unlikely to deliver public benefits.

Rather than await the final ruling, on Tuesday Qantas said it would unwind its tie-up with China Eastern despite its belief the partnership had been beneficial to travellers.

Last week Qantas announced it would not pursue the acquisition of Alliance Aviation by going to court to fight the ACCC which had opposed the $614m deal.

The setbacks for Qantas came as former Jetstar CEO Bruce Buchanan called for a “nuanced” debate on the future of the aviation industry, saying some protections were appropriate.

Now running eCommerce software company Rokt, Mr Buchanan said Qantas had to compete against foreign airlines that paid staff much lower wages than in Australia.

“You don’t want to wind up in a situation where we unconsciously get to the point where we got to with the automotive industry,” Mr Buchanan told The Australian from New York.

“We tried to have internationally exposed businesses with high labour costs, and it worked out that we had no automotive companies in Australia.”

Former Jetstar CEO Bruce Buchanan, now head of Rokt.

He said these were the same forces now facing the aviation industry.

“It’s very hard to have very strong labour conditions and protections through unions and labour rights and also have highly exposed international trade structures where you are saying you want every single (international) airline to be able to compete with every Australian business and consumers, wanting a choice of flying on any airline,” said Mr Buchanan.

“You want heavy investment in product, you’ve got internationally exposed businesses and consumers want choice.”

He acknowledged Qantas “made some mistakes” in the last year when they were ramping up after border closures, and were under some pressure.

Mr Buchanan said he had some sympathy for “the consumer pain caused over refunds and other things” but there were bigger issues at stake.

“We need to get around that noise and ask what do we want Qantas to look like in 10 or 20 years’ time? And therefore how do we make the decisions as a nation?” he asked.

“Fundamentally there’s a bigger choice here for Australia.”

A Qantas spokesman said they had begun the process of uncoupling from China Eastern, which included an end to the co-ordination of pricing and schedules.

To ensure there was no impact on customers, he said Qantas and China Eastern would honour all existing bookings, including the frequent flyer benefits and lounge access customers enjoyed under the joint business.

“China Eastern remains an important partner for Qantas,” the spokesman said.

“Our codeshare agreement will continue on routes between Australia and China which both airlines don’t operate, offering Qantas frequent flyers the opportunity to earn and redeem points on selected China Eastern flights.”

Qantas withdrew from China routes during the pandemic, but was preparing to reinstate Sydney-Shanghai from October 29.

Qantas will soon face off with the ACCC in the Federal Court over allegations the airline sold tickets on more than 8000 already cancelled flights last year.

ACCC chair Gina Cass-Gottlieb has indicated she would be seeking a penalty in the vicinity of $250m against Qantas, for the alleged “false, misleading or deceptive conduct”.

A case management hearing in the matter has been set down for November 8, before Justice Helen Rofe.

Originally published as Qantas bows to ACCC wishes and ends China Eastern tie-up