Cathay Pacific and Qantas have failed in a bid to expand their codeshare alliance.
The International Air Services Commission initially blocked the expanded codeshare arrangement, citing anti-trust concerns particularly to the detriment of Virgin Australia.
After issuing a draft decision rejecting the proposal, Qantas sought to convince the agency to reconsider but it would not budge, issuing a final denial.
Under their proposal the airlines wanted to add 19 one-way routes beyond Hong Kong and 32 additional Qantas – operated domestic routes.
"The Commission finds that the variation is 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 potential future entrants on the route,” it said in its decision.
"If this occurs, it is likely to weaken competition on the route, leading, over time, to an increase in prices and/or a reduction in other benefits to consumers."
It had been vehemently opposed by Virgin Australia.
The commission said the likely consumer benefits were limited and would be outweighed by possible negative repercussions from a less competitive market.
