Qantas, JAL to form JBA to stimulate market recovery

Qantas (QF, Sydney Kingsford Smith) and JAL – Japan Airlines (JL, Tokyo Haneda) have sought Australian Competition and Consumer Commission (ACCC) for approval for a proposed three-year joint business agreement (JBA). “The Applicants wish to commence coordination under the Joint Business Agreement (JBA) and associated commercial agreements under which they will coordinate to rebuild operations between and within Australia/New Zealand and Japan for three years,” the airlines said in their application. The two carriers argued that by forming the time-limited JBA, they would deliver incremental benefits to the market during the post-COVID recovery phase. In particular, they said cooperation would allow them to operate a broader range of routes instead of “crowding the Sydney-Tokyo route with overlapping flying”. The JBA would enable Qantas to accelerate the restart of its services from Sydney Kingsford Smith to each of Osaka Kansai and Sapporo Chitose, and from both Melbourne Tullamarine and Brisbane Int’l to Tokyo Narita. The airline said that the JBA could also stimulate the cross-Tasman market to New Zealand due to an increase in connecting passengers. The JBA would also allow the airlines to expand their current, arms-length codeshare agreement. Qantas is looking to codeshare on JAL flights to 14 destinations in Japan, while JAL would get access to 11 destinations in Australia and four in New Zealand. Qantas and JAL also hope to work together in respect of marketing and sales, pricing, scheduling, distribution strategies and agency arrangements, yield and inventory management, frequent flyer programs, lounges, joint procurement, product and service standards, and cargo. The applicants argued that the Australia-Japan market would remain competitive after the formation of the JBA, even though Qantas Group has a 56% market share by the number of passengers in this market in 2019, and JAL was the largest non-Australian airline with a 10% market share. The proposed JBA would also include Qantas’ low-cost carrier unit Jetstar Airways (JQ, Melbourne Tullamarine). The airlines concurrently filed for approval of the JBA in Japan and New Zealand. The ACCC expects to issue its final decision, following a period of consultations with the public and the carriers themselves, in May 2021. Both Qantas and JAL are members of the Oneworld alliance.