Australia’s Department of Infrastructure and Regional Development has come out in support of the proposed tie-up between Qantas and China Eastern Airlines, despite opposition from the Australian Competition and Consumer Commission.
Last month the ACCC said the partnership would impact competition as the two airlines would account for more than 80% of the overall seat capacity available on the Sydney-Shanghai route.
"A significant public detriment is likely to result," the ACCC said.
However the DIRD claims the ACCC report has overstated the impact, saying airlines such as Singapore Airlines, Malaysia Airlines and Cathay Pacific offer one-stop services between the two airports providing sufficient choice for consumers.
"While indirect flights only account for around 12 to 15 percent of passenger traffic, it would be reasonable to expect a greater proposition of passengers would elect to travel on indirect services should Qantas and China Eastern increase fare prices under the proposed agreement," the DIRD said in a letter to the ACCC.
It also said it was "too narrowly focused on the Sydney-Shanghai route" and did not consider the wide ranging benefits of better connectivity for the China-Australia market in general.
