28 November 2012

Australian authorities agree to Qantas/SAA code-share extension

While the Australian IASC has agreed to an extension of the Qantas/SAA code-share agreement, SAA is still awaiting a South African Competition Commission exemption decision.

SAA flies an Airbus A340-600 on the Johannesburg-Perth route

We remain optimistic about the decision to be taken by the South African Competition Commission. – Dileseng Koetle, SAA head of communication

The Australian International Air Services Commission (IASC) has granted permission for South African Airways (SAA) to continue code sharing on Qantas Airways-operated flights between Australia and South Africa until 31 December 2014.

The IASC also granted Qantas's application to operate seven services a week on the South African route for five years from the date that Qantas's existing determinations on the route are revoked.

In its draft determination, the IASC explained its reasons for limiting the term of the code-share arrangement. It accepted that 'there were likely to be marginal public benefits gained from approving the code share for the next two years', but said it was not satisfied that it would be of benefit to the public beyond 2014.

The IASC felt the prospects of the two carriers competing directly on the Perth and Sydney routes would be greater after 2014. It felt that if it was economically viable for the two carriers to operate competing services on direct routes, then a code share could hinder rather than promote competition by 'deterring or delaying the introduction of competing services and increasing barriers to entry'.

Meanwhile, SAA has applied to the South African Competition Commission for a further exemption certificate that will allow it to continue its code share with Qantas beyond 31 December 2012.

According to the IASC determination document (2012) IASC 106, on 26 July 2011 the South African Competition Commission granted an exemption certificate to SAA to allow its code-share agreement with Qantas to continue until 31 December 2012. If approved, the new exemption is expected to be for a further three-year period, starting on 1 January 2013.

Dileseng Koetle, SAA head of communication, said SAA was very pleased with the determination by the Australian IASC, and was awaiting the ruling by the South African Competition Commission. 'We remain optimistic about the decision to be taken by the South African Competition Commission,' she said.

Michi Messner, Qantas regional manager: Africa, said Qantas welcomed the extension of the Qantas/SAA code share to 31 December 2014. 'We remain of the view that the code share is of benefit to the public and promotes competition on the South Africa route,' she said.

Lalie Ngozi, South African Tourism Australasia country manager, also welcomed the Qantas/SAA code-share extension. 'The decision by the IASC is good news, not just for Qantas and SAA, but also for Australian travellers who are keen to visit South Africa, whether for business or leisure.'

She added that the daily flights from Sydney and Perth to Johannesburg made travel to South Africa very accessible. 'Most importantly, we are able to plan with certainty and continue our efforts to ensure that as many Australians get to tick South Africa off their bucket lists,' she concluded.

Tourist arrivals from Australasia to South Africa increased by 13,6% from January to July 2012, compared with the same period in 2011. Arrivals from Australia increased by 14% to 64 792, while arrivals from New Zealand increased by 10,4% during the period to 11 081.

According to the IASC determination, in the year ended 31 May 2012, total passenger movements between Australia and South Africa numbered 368 000, with through traffic making up 21,3% of the passengers travelling between the two countries.