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Sun 24 Nov 2013 10:29 AM

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Emirates' partner Qantas investigated by regulators

Australian competition authority is concerned the national carrier is abusing its market power in war with Etihad-backed airline Virgin Australia

Emirates' partner Qantas investigated by regulators
(AFP/Getty Images)

Emirates’ key alliance partner, Australian carrier Qantas, is being investigated by its country’s competition regulator in relation to a bitter fight with Virgin Australia, the airline part owned by Abu Dhabi’s Etihad Airways.

It is believed the Australian Competition and Consumer Commission has been investigating since August the way Qantas has added extra capacity on air routes as part of its ­strategy to control 65 percent of the domestic market, the Sydney Morning Herald reported.

It is alleged the airline may have used its significant share of the domestic market to sell tickets at below cost price in a move designed for “eliminating or substantially damaging a competitor".

The ACCC does not comment publicly on ongoing investigations, however, in September ACCC chairman Rod Sims said he was “concerned” about comments by Qantas executives about the domestic price war with Virgin.

The head of Qantas's domestic business, Lyell Strambi, had previously warned he would add two planes for each one added by Virgin.

A Qantas spokesman would not comment on any ACCC investigation.

"We've been very clear about our intent to maintain our profit-maximising 65 percent share of the domestic market, which puts us in the position to offer the best service to customers," the spokesman told the newspaper.

"This has been in place for about 10 years and our full-year financial results confirmed the merits of this strategy.

"With potentially unlimited foreign capital flowing into our competitor, the concept of market share equating to market power is debatable and ­probably redundant."

The spokesman was referring to a capital raising exercise by Virgin Australia, which will involve its major stakeholders, Etihad Airways and Singapore Airlines, which each own 19.9 percent, and Air New Zealand, which has a 24 percent stake, increasing their investments in the Australian airline to raise $350m.

Qantas boss Alan Joyce has accused the foreign airlines of a “virtual takeover” of Virgin Australia, claiming the foreign cash injection was uncompetitive and would destabilise Australia’s domestic aviation industry, local tourism and jobs.

Qantas is ­considering referring Virgin to the Anti-Dumping Commission to highlight what it believes is predatory behaviour by its rival.

The former government-owned carrier was fined $20m in 2008 for price fixing in relation to a deal with other international airlines on fuel surcharges.

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RAH 6 years ago

The last paragraph is a bit vague.

Qantas was found breaching Australian laws by colluding with airlines to fix prices. The $20m fine was by the Australian authorities in relation to this breach. Qantas also got slapped with a $61 million fine for this same breach however, this time, by the US authorities.

Chris 6 years ago

One wonders why you can get special affairs from the Gulf to Thailand for around $A500 return when the same flying time from Australia with non discount carriers costs around $A860 plus. QANTAS has been price gouging through setting fairs for many years as proven by the fine that was imposed. In Australia we need lots more international competition.