American Airlines’ new Los Angeles-Sydney service will operate as an afternoon departure from Sydney and an overnight flight from LAX.
The oneworld alliance member and Qantas partner has released the flight times for its return to Australia for the first time in two decades, with AA72 scheduled to depart Los Angeles at 2150 local time and arrive in Sydney at 0755 two days later.
Meanwhile, the reciprocal AA72 is scheduled to take off from Sydney at 1200 for a 0650 landing in Los Angeles.
The flight timings are similar to Qantas’s daily A380 Sydney-Los Angeles service, with the departures taking place within an hour of QF11 and QF12.
Tickets for the new American flights, which will be operated by three-class Boeing 777-300ERs and due to begin from December 19, go on sale from Sunday (US time).
“Expanding our global footprint to another continent is an important step for American as we continue to invest in our network to provide the best possible travel experience for our customers,” American chief marketing officer Andrew Nocella said in a statement on Thursday (US time).
“We are eager to begin service to Australia with our flagship aircraft, the Boeing 777-300ER, which offers amenities and service that international travellers recognise as one of the best travel experiences in the industry.”
American and Qantas were granted interim authorisation from the Australian Competition and Consumer Commission (ACCC) for an expanded joint business agreement to reflect the US carrier’s return to Australia and the Flying Kangaroo’s resumption of Sydney-San Francisco flights.
Qantas is reducing the frequency of its evening departure from Sydney to Los Angeles from daily to three times weekly and afternoon flights from Melbourne to Los Angeles from three to two flights a week to free up a Boeing 747 to return to San Francisco for the first time since 2011.
Qantas and American Airlines can begin selling tickets for their proposed new trans-Pacific flights after their expanded alliance received provisional approval from Australia’s competition watchdog.
The Australian Competition and Consumer Commission (ACCC) has granted Qantas and American interim authorisation for the tie-up, which has been expanded to include Qantas’s return to San Francisco and the start of American’s new Sydney-Los Angeles service with its own Boeing 777-300ERs.
“The ACCC considers that granting interim authorisation is likely to lead to additional capacity on the Sydney to Los Angeles route, and increased capacity and competition on the Sydney to San Francisco route,” ACCC Commissioner Jill Walker said in a statement on Thursday.
“This is likely to result in benefits to passengers that wish to use these services. Further, granting interim authorisation is unlikely to have any permanent impact on the market that could not be reversed in the event final authorisation is not granted.”
Although Qantas and American had an existing alliance that the ACCC approved in September 2011 for five years, the pair sought reauthorisation of a new agreement that included a revenue-sharing component to reflect American’s entry on trans-Pacific routes with its own metal and Qantas’s return to San Francisco.
In a submission to ACCC, Air NZ had called on the regulator to deny interim authorisation, arguing there was no compelling reason for it to be granted.
The ACCC said interim authorisation was not indicative of whether or not final authorisation would be granted.
Qantas said schedules and fares for both its Sydney-San Francisco service (due to start December 18) and American’s Los Angeles-Sydney flights (taking off December 19) would be available in the coming weeks.
Qantas International chief executive Gareth Evans said the feedback from customers on the return to San Francisco has been very positive and welcomed the ACCC’s interim authorisation.
“Our corporate customers in particular have told us they look forward to saving about four hours each way by not having to connect through Los Angeles,” Evans said in a statement.
The ACCC said it would proceed to preparing its draft determination, with a decision expected in August/September.
Meanwhile, Qantas and American had also applied to the US Department of Transportation for approval of the expanded alliance.
Qantas and American Airlines say the planned launch of their new services between Australia and the US cannot proceed without the green light from regulators and have described Air New Zealand’s objections as “misunderstanding the nature of the proposed conduct”.
The two oneworld alliance members are seeking Australian Competition and Consumer Commission (ACCC) approval for an updated joint business agreement (JBA) to reflect American’s plans to commence a daily Sydney-Los Angeles service with its own aircraft and Qantas’s return to San Francisco from December from December 2015.
The pair has also applied for interim authorisation from the ACCC, which would pave the way for ticket sales and other marketing and promotional activity to commence while the regulator continued with its assessment of the full application.
Qantas and American say interim authorisation would give the new routes the best prospect of success.
“Interim authorisation is necessary and urgent,” Qantas and American told the ACCC in a submission dated July 3.
“Although the essence of the coordination remains the same, there is a risk that coordinating in respect of the new routes would technically not be covered by the existing agreements or, therefore, the existing authorisations.
“The ability to conduct a coordinated strategic campaign is the only way to enable a viable launch for these important new services.”
Qantas and American’s submission were in response to Air NZ’s objections to interim authorisation.
Air NZ told the ACCC it believed the what Qantas and American were proposing did not require authorisation and were not appropriate without a full and considered analysis.
“There is no compelling reason why the agreement has to commence in December, given existing arrangements,” Air NZ said in its submission dated July 1.
“The parties already have authorisation to coordinate on designated routes under the original JBA, which is valid until June 2016.
Qantas and American said Air NZ’s objections reflected a “misunderstanding of the nature of the proposed conduct”, adding that the NZ flag carrier would be a “major beneficiary” of any holdup to interim authorisation.
“Air New Zealand’s stated concerns must be viewed in the context of the strategic advantage it would enjoy from delaying or diluting the success of the introduction of the Applicant’s new joint services,” the pair said.
Other groups, such as the Department of Infrastructure and Regional Development, Tourism Australia and the Australian Federation of Travel Agents, have told the ACCC they supported the expanded alliance between Qantas and American
Air NZ has been heavily promoting travel to North America from Australia via its Auckland hub in recent times, including sub-$1,000 fares on selected dates to San Francisco, Los Angeles and Vancouver. The airline is also launching two new routes – Auckland-Houston and Auckland-Buenos Aires – in December.
Meanwhile, American and Qantas have also flagged starting up direct flights from New Zealand to the US in direct competition with Air NZ.
Currently, China Eastern flies daily to Shanghai from both Melbourne and Sydney.
In their latest filing to the ACCC, the parties said China Eastern would launch an extra three flights a week on Sydney-Shanghai and Melbourne-Shanghai from September, before moving to a double daily schedule on both city pairs by November.
Moreover, China Eastern proposed new seasonal Cairns-Shanghai flights from January 2016, although no frequency information was provided. And the submission also mentioned the previously raised prospect of a new Perth-Shanghai service some time in the future.
The parties said the alliance gave China Eastern an incentive to add more capacity to Australia, given it would enable the Chinese flag carrier to “build on Qantas’s domestic business and frequent flyer proposition by accessing high-yielding Australian domestic corporate and government travellers”.
“It will give China Eastern’s worldwide sales force better access to sell to and from Australia, particularly by being able to offer more seamless travel to secondary and regional cities served by Qantas,” the submission said.
“The proposed conduct will facilitate and expedite the deployment of additional capacity to Australia. It will also make capacity increases more sustainable.”
And Qantas, which has one daily flight from Sydney to Shanghai – its sole destination in mainland China – would also consider adding new services.
“Over time, if the proposed conduct proceeds, Qantas would potentially explore opportunities to introduce new services to China,” the submission said.
The proposed second daily service would leave Australia in the evening to give customers more choice, given both Qantas and China Eastern’s current flights departed Australia in the morning.
“In the absence of the proposed conduct, this capacity expansion will not occur,” the submission said.
China Eastern and Qantas have offered a “capacity condition” on the Sydney-Shanghai route as part of their attempt to win over the Australian Competition and Consumer Commission (ACCC) on their proposed alliance on Australia-China routes.
The offer of a capacity condition is contained in the two carriers’ latest submission to the ACCC seeking approval for the proposed tie-up. The ACCC said in a draft determination in March it intended to block the alliance because it would give Qantas and China Eastern the ability to raise fares and limit capacity growth on the Sydney-Shanghai route.
In response to the draft determination, the pair said the ACCC failed to appreciate the vigorous and effective competition provided by other carriers offering indirect services between Australia and China the role of other airlines in the Australia-China market.
Moreover, the competition regulator placed insufficient weight on the public benefits Qantas and China Eastern claim will flow from the alliance and disregarded the benefits to Australians that come from an Australian carrier being able to maintain an operating presence in China.
Also, Qantas and China Eastern said their proposed partnership would enable and expedite capacity growth on routes between the two countries, rejecting the ACCC’s assertion that it would limit growth.
“The Commission’s stated concerns ignore commercial realities,” China Eastern and Qantas said in their joint submission.
In its draft determination, the ACCC’s argued the partnership would result in “significant public detriment”, given Qantas and China Eastern currently held about 83 per cent of all seats between Sydney and Shanghai, which gave them an “increased ability and incentive to limit capacity and/or increase airfares” on the route.
Qantas currently flies daily from Sydney to Shanghai, its only destination in mainland China, with Airbus A330s. China Eastern operates Sydney-Shanghai, Melbourne-Shanghai and Sydney-Nanjing-Beijing services.
While Air China also flies between Sydney and Shanghai with a three times a week service, the ACCC said in March it did not believe the Star Alliance member would be an effective competitor against a combined China Eastern-Qantas entity and noted it had reduced its presence on the route over the past five years.
In response to the ACCC’s initial ruling, and despite their rebuttal of certain points made in the draft determination, Qantas and China Eastern have offered a “capacity condition which specifically addresses the Commission’s concerns and which ensures the Applicants will maintain and grow capacity”.
“This Draft Capacity Condition, coupled with the commercial terms of the Joint Coordination Agreement and the realities of global aviation, mean that the Applicants will neither have the ability or incentive to reduce capacity or limit growth,” the submission said.
The details of the capacity condition were redacted in the public version of the China Eastern/Qantas submission for commercial in confidence reasons.
Qantas and China Eastern also asked economists at HoustonKemp and aviation consulting house CAPA – Centre for Aviation to analyse the effects of their proposed alliance.
The CAPA report noted capacity between Australia and China via mid-point hubs such as Hong Kong, Singapore and Kuala Lumpur to the top 15 Chinese airports more than doubled between March 2010 and March 2015.
Meanwhile, the HoustonKemp report said indirect operators imposed a strong constraint on the price offered for direct services on the Sydney/Shanghai route as well as a range of Australia-China city-pairs.
“To deny authorisation to the entire Proposed Conduct on the basis of one single route overlap is inappropriate, particularly given that the Commission is otherwise satisfied that the Proposed Conduct will not have a significant impact on any other area of competition,” the China Eastern and Qantas submission said.
“The overlap with China Eastern in respect of the Sydney-Shanghai route that the Commission perceives as the fundamental problem is in fact what underpins the entire arrangement and therefore the mutual commercial interest of the parties to deliver the public benefits of connectivity, schedule choice and terminal co-location.”
The complete China Eastern/Qantas submission can be read on the ACCC’s website.
Australia’s competition regulator has given Qantas more time respond to its draft ruling blocking the airline’s proposed alliance with China Eastern.
The Australian Competition and Consumer Commission’s (ACCC) had indicated it intended to block the proposed alliance in a draft ruling on March 24, and submissions in response to that determination were due by April 8.
However, the ACCC has agreed to a Qantas request to push back the deadline for submissions in response to the draft determination until April 24 in order to provide enough time for the airline to make a submission.
The ACCC has also extended its consultation period for the proposed alliance until August 31, meaning it is likely to be at least September before a final decision is made. Qantas and China Eastern unveiled their proposed tie-up in November 2014.
“The ACCC considers that an extension is appropriate to provide sufficient time for Qantas to provide a submission and for the ACCC to consider the additional information Qantas proposes to provide,” the ACCC said in a letter to Qantas and China Eastern dated April 16.
Qantas and China Eastern have agreed to the extension.
Government and industry representatives have come out against the ACCC’s draft ruling and urged the regulator to reconsider.
Federal Member for Leichhardt Warren Entsch’s submission said the tie-up would allow Qantas to effectively compete and build capacity within the Australia-China market.
“I respectfully request that the ACCC reconsider this draft determination and support the proposed partnership,” Entsch wrote.
“Regardless of the outcome of this review Qantas assures me that they will remain committed to the Chinese market however it cannot be denied that without this authorisation they will be at a significant disadvantage.”
State and federal tourism bodies have also written to the ACCC urging it to reverse course and give alliance the green light.
The ACCC draft ruling argued the partnership would result in “significant public detriment”, given Qantas and China Eastern currently had about 83 per cent of all seats between Sydney and Shanghai and the proposed alliance would give them an “increased ability and incentive to limit capacity and/or increase airfares” on the route.
Travellers at the nation’s four largest airports have experienced little to no improvement in the passenger experience despite ever increasing profits, the Australian Competition and Consumer Commission (ACCC) says.
The competition regulator’s Airport Monitoring Report for 2013/14 says Brisbane, Melbourne, Perth and Sydney airports achieved increases in aeronautical revenues in real terms, both in total and on a per passenger basis in the most recent financial year. Moreover, total aeronautical operating margin also increased in real terms at each airport.
“Despite some significant investment, the monitored airports have continued to generate substantial revenue and profitability increases, yet we are not seeing any substantial increases in the overall average quality of service indicators at these airports,” ACCC chairman Rod Sims said in a statement on Thursday.
“In fact, service quality at all monitored airports has declined over the past decade, despite higher unit revenues at all airports.”
In 2013/14, Melbourne Airport received the equal lowest overall average quality of service rating, scoring 3.4 out of five, maintaining its “satisfactory” rating from the prior year.
Perth Airport, whose rating declined 1.4 per cent, also came in at “satisfactory” with a score 3.4.
Sydney climbed off the bottom for the first time since 2003/04, improving its rating 4.7 per cent to 3.5 out of five, moving up from “poor” in 2012/13 to “satisfactory”.
“We’re pleased that our investment in services and facilities has been recognised by our 38.5 million passengers a year and our airline customers with higher overall quality of service ratings,” Sydney Airport chief executive Kerrie Mather said.
“We also continue to consult closely with our airline partners to ensure that our investment in airport infrastructure reflects the needs of their businesses and is in line with demand.”
Brisbane Airport was the only airport to achieve an overall average quality of service rating of “good”, scoring four out of five for a second year. The airport said in a statement it had achieved the highest rating in this category in the ACCC report for 11 years in a row.
“The survey results are very important as it provides an unbiased measure of where we sit in relation to other airports and what areas we need to concentrate on,” Brisbane Airport chief executive Julieanne Alroe said.
All airports reported increased aeronautical revenue per passenger in 2013/14, compared with the prior year. (See table below)
And Sydney Airport had the highest aeronautical operating margin per passenger at A$8, followed by Perth (A$5.47), Melbourne (A$4.48) and Brisbane (A$4.67).
The Board of Airline Representatives in Australia (BARA) said the ACCC report highlighted the need for airport operators and international airlines to reach alignment over capacity and quality of services provided to airlines and passengers.
“BARA’s preference is for commercially negotiated agreements with airport operators that are aligned with improved outcomes for airlines and passengers at reasonable and justifiable prices,” BARA executive director Barry Abrams said in a statement.
“No one pretends such negotiations will necessarily be smooth but new agreements must be better aligned with improving outcomes rather than simply rolling forward the status quo.”
Australian Airports Association (AAA) chairman Stephen Goodwin said the ACCC report showed the four airports spent $893.5 million on aeronautical infrastructure in 2013/14 to improve facilities and and services and were due to invest a further $9 billion over the next decade.
“The multi-billion dollar levels of investment that are occurring at each of these four airports is evidence of an unwavering commitment to continually improve and develop the services we provide our customers,” Goodwin said.
The ACCC report found all four airports grew their car parking revenue in 2013/14.
While three out of the four – Brisbane, Perth and Sydney – also managed to grow car park operating margin, Melbourne Airport reported a 1.4 per cent decrease in a year where the total number of car spaces at Tullamarine increased by 9.4 per cent to 24,406.
Melbourne Airport chief executive Chris Woodruff said average car parking prices were down about one per cent after the introduction of new prices in July 2014, which falls outside the reporting period.
“Our online booking facility is proving increasingly popular with customers and for good reason, as people can save up to 65 per cent by simply booking online,” Woodruff said.
“We’re also investing in new technology to improve the overall car park experience with bay-finding technology introduced earlier this year and ‘find my car’ technology coming soon.”
Aeronautical revenue per passenger (in A$)
Brisbane 10.94 10.81
Melbourne 9.90 9.59
Perth 12.47 11.22
Sydney 16.00 15.91
ACCC watchdog accused of spending taxpayer money on extravagant events: The commission is set to hold a global gathering with $47,000 worth of catering. Photo: Supplied
The cash-strapped competition watchdog has been accused of behaving extravagantly by spending half a million dollars of taxpayer money at a four-day gathering of global regulators in Sydney next month.
Australian Competition and Consumer Commission officials told a parliamentary inquiry that it was scaling back its corporate surveillance activities as a result of $171 million in federal government budget cuts over four years.
At the end of April, the ACCC will host the International Competition Network, an annual meeting of 500 competition regulators, lawyers and academics from around the world.
Illustration: Matt Golding.
Expenses for the event include $47,000 spent on catering for a“cocktail and canape style welcome event” at the Opera House. Food and drink for delegates and their guests will be provided by celebrity chef Matt Moran’s exclusive Aria restaurant. Attendees at the soiree will enjoy lamb filo cigars, Petuna ocean trout tacos and “gentleman’s handshake” cocktails.
The ACCC has taken out a $260,000 contract with the Sheraton on the Park, which will host the conference.
Another $32,000 will be spent on a luxury cruise of Sydney harbour for delegates and their spouses. Taxpayers will also foot the bill for a networking dinner at the Museum of Modern Art at Circular Quay.
A spokeswoman for the ACCC said the event will cost an estimated $500,000 in total, with the final cost to depend on number of guests who attend, audio visual requirements and catering requirements.
Pat Conroy, the chair of Labor’s Waste Watch Committee, said the ACCC needed to justify the “extravagant” spending on the International Competition Network meeting.
“How is spending $80,000 on harbour cruises and canapes at the Opera House helping to protect consumers from unscrupulous big businesses?” Mr Conroy asked.
“If you want to show off our beautiful harbour to foreign bureaucrats, why not put them on the return ferry to Manly for $15?”
The federal government should investigate whether the event could have been run more cheaply, Mr Conroy said.
An ACCC spokeswoman said the event, now in its 14th year, was an important way for competition agencies learn from each other and develop approaches on issues such as mergers and cartel behaviour that are effective across jurisdictions.
The spokeswoman said activities such as harbour cruises are standard for the conference, which has been held previously in Morocco, Brazil and Japan but not in Australia.
“The ACCC will not be selected as the host of the event in the foreseeable future so it is worth noting that these expenses will not be incurred again within the next decade or two,” the spokeswoman said. “Our expenditure isalso less that most previous hosts.”
Australia’s competition regulator has issued a draft decision knocking back China Eastern and Qantas’s application for a proposed alliance.
The Australian Competition and Consumer Commission (ACCC) draft determination said the partnership was “likely to result in significant public detriment by giving Qantas and China Eastern increased ability and incentive to limit capacity and/or increase airfares on the Sydney-Shanghai route”.
ACCC chairman Rod Sims said Qantas and China Eastern accounted for more than 80 per cent of capacity on the Sydney-Shanghai route and were the “major competitive constraint on each other” given they were the only carriers offering direct flights.
“The ACCC understands Qantas’s desire to form an alliance with a Chinese airline to establish a gateway to North East Asia,” Sims said in a statement on Tuesday.
“However, the ACCC’s concern is that they have chosen to do so with their main competitor on the one route between Australia and China on which Qantas operates direct flights.
“Competition between them will be greatly reduced under the proposed agreement.”
While the ACCC acknowledged there would be “some limited public benefits” as part of the proposed alliance, it was not convinced the benefits outweighed with “significant public detriment likely to result from Qantas and China Eastern coordinating their services on the Sydney-Shanghai route”.
Submissions from interested parties in response to the ACCC’s draft decision were due by April 8.
Comment was being sought from Qantas and China Eastern.
Australia’s competition watchdog has given the Board of Airline Representatives of Australia (BARA) the green light to negotiate on behalf of its member airlines for a further 10 years.
The Australian Competition and Consumer Commission (ACCC) says BARA’s collective bargaining is likely to result in public benefits from cost savings associated with the pooling and sharing of resources.
“In addition, the ACCC accepts that there may be some public benefits in the form of promoting more efficient infrastructure investment and reducing information asymmetries,” the ACCC said in a draft determination on Wednesday.
“Further the ACCC accepts that to the extent the Australian Government mandates new security requirements, the proposed conduct may assist with its implementation including through enabling BARA to conduct industry-wide tender processes.”
BARA applied to the ACCC in October 2014 seeking ACCC reauthorisation to negotiate and bargain collectively on behalf of its 29 member airlines, which account for about 90 per cent of all international traffic to and from Australia.
ACCC authorisation would allow BARA to negotiate on the prices that airport operators, Airservices, the Bureau of Meteorology and other sole suppliers at designated international airports such as government-mandated security services provider Unysis charge its airline members.
BARA executive director Barry Abrams said the 10-year authorisation reduced industry compliance costs and provided the association with long-term operating certainty.
“Australia’s international aviation is facing significant challenges which will impact on air travel affordability and the economic growth the industry generates, Abrams said in a statement on Thursday.
“Increased costs at airports, heightened investment in air navigation technology and the competitive and reliable supply of jet fuel all need to be addressed over time.
“Under the ACCC’s authorisation, BARA’s member airlines can continue to pool their resources and expertise in seeking more innovative and cost-efficient solutions. Improving industry productivity creates greater value to be shared among passengers, airlines and suppliers.”
BARA told the ACCC it estimated there was a saving of about $2 million in transaction costs for its member airlines for every agreement negotiated with the major international airports.