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Regulator blocks expanded Qantas-Cathay codeshare

Australia’s International Air Services Commission (IASC) is proposing to block a proposed expansion of Qantas and Cathay Pacific’s codeshare arrangements on the Australia-Hong Kong routes due to concerns that it will extend their dominance in the market.

The two Oneworld carriers already codeshare on their services between the two countries on routes that do not overlap, such as Perth-Hong Kong, but had been seeking clearance to extend that to other routes under a free-sale arrangement.

The Commission issued a draft decision on 24 May, noting that while the proposed codeshare could potentially improve connectivity for passengers and route options, it is also “likely to entrench and expand the market position of Qantas and Cathay Pacific, to the detriment of Virgin Australia’s competitive position and the position of any future entrants on the route.”

Cirium schedules data shows that Cathay is the largest carrier between the two countries, accounting for 64% of seats operated during May. Qantas is second at 24%, while Virgin holds the remainder.

Qantas had argued that booking under the codeshare would be limited to passengers travelling onwards from Hong Kong under a single airline code and was not aimed at reducing competition on the Australia-Hong Kong market.

However, the Commission says that existing codeshare and interline arrangements already allow that, and thus the “marketing of complex itineraries is not dependent on the approval of this application.”

Although it is a draft decision, it came into effect on 24 May.

The IASC is taking public comments on the draft decision until 7 June. It appears likely that Qantas will make further submissions to influence the commission to change its decision.

Qantas also codeshares on a number of Cathay’s flights from Hong Kong to destinations in India, Vietnam, Myanmar and Japan. Cathay also places its code on a number of Qantas's domestic routes.

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