IASC will not make variance to determination on Australia-PNG as requested by Qantas

Australia's International Air Services Commission (IASC) issued (30-Apr-2018) a Notification of Draft Decisions related to Qantas' application to enable it to continue using its capacity allocation on the Papua New Guinea route to provide codeshare services, on a freesale basis with Air Niugini on the Brisbane-Port Moresby and Sydney-Port Moresby sectors from 01-Jul-2018 until the expiry of the determinations; and codeshare on a freesale basis, as marketing carrier on services operated by Air Niugini on the Cairns-Port Moresby and Townsville-Port Moresby sectors for the duration of the determinations. In its review, IASC noted that Qantas and Air Niugini operate over 81% of the capacity on the Papua New Guinea route. "The impact of the combination of the schedule change and codeshare approval has been a marked shift of traffic towards Qantas, with its number of passengers carried growing in 2017 by 39%. With static market demand, the increase in Qantas' load came from the other carriers on the route, predominantly from Virgin Australia". IASC also noted that traffic between Australia and Port Morseby has remained "quite static" over the past 12 months, "but that load shifted between the gateways". IASC explained: "With the move of Qantas services to Brisbane, the market from Cairns declined, while traffic originating in or connecting through Brisbane increased". IASC also noted that the ACCC has expressed concern that a "change from block-space to free-sale codeshare shifts commercial risk from the marketing to the operating carrier", adding: "Price sampling by the Commission and analysis of confidential data of the route yields provided by Qantas reflect this lack of price competition. Public submissions have previously urged the Commission to approve the codeshare with the expectation that price competition between the partners would result, but this competitive behaviour was not observed". Following its review, IASC "proposes to make decisions not to vary Determinations [2016] IASC 110 and [2014] IASC 105, in the manner requested by Qantas". [more - original PR]