China Eastern Airlines (MU, Shanghai Hongqiao) has offered various concessions to the Australian Competition and Consumer Commission (ACCC) in a bid to secure a five-year authorization for its planned joint-venture with Qantas (QF, Sydney Kingsford Smith) for flights between Australia and China.
The ACCC warned in March that it may deny granting the venture regulatory approval over concerns the tie-up could harm competition on the Sydney Kingsford Smith-Shanghai Pudong route. Aside from Air China (CA, Beijing Capital), Qantas and China Eastern are the dominant operators on the route at present
An ACCC disclosure shows China Eastern, in a bid to ease the ACCC's concerns, has pledged to increase service on its Shanghai to Sydney and Melbourne Tullamarine routes through the introduction of an additional three weekly A330-200-operated flights on each route effective September of this year. That would then graduate to an additional daily service with effect from November.
But, while the service increase to Melbourne and Sydney would initially only be effective between September and February of each year, it could be extended to year-round operations should the joint venture generate sufficient demand.
Other measures include the introduction of seasonal flights between Shanghai and Cairns beginning January 15, 2016 as well as the launch of flights from Shanghai to a new Australian destination not currently served by China Eastern. Though the actual city was redacted in the public filing, the Sydney Morning Herald has named it as Brisbane International.
Both the Australian and Chinese governments have come out in support of the venture following the signing of an Open Skies agreement between the two countries in January this year.
