Qantas Airways Limited (ASX: QAN) shares are taking off on Friday despite the consumer watchdog striking the latest blow to the struggling airline.
After closing Thursday at $5.59, the Qantas share price is up 1.43% at $5.67 in early trade on Friday morning.
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What did the ACCC say?
The Australian Competition and Consumer Commission on Friday announced it was planning to deny a request for coordination between the Australian carrier and China Eastern Airlines.
The two airlines already cooperate to fly passengers and cargo between Australia and mainland China. The pair had asked for permission to extend the agreement until the end of March 2024.
The consumer watchdog has determined that the coordination "between two key competitors may breach competition laws".
Such collusion would only be allowed if the public benefits surpassed the reduced competition in the industry.
ACCC commissioner Anna Brakey expressed doubt that the extension of the deal met this test.
"At this stage, we are not satisfied that the likely harm to competition from Qantas and China Eastern's proposed coordination would be outweighed by any potential benefits," she said.
"We are concerned that the authorisation would provide Qantas and China Eastern with the opportunity and incentive to increase prices, compared to what they would charge absent the alliance, by limiting or delaying the introduction of additional capacity on the Sydney-Shanghai route as passenger demand continues to grow."
At the moment, China Eastern is the only airline flying the Sydney-Shanghai route, with Qantas scheduled to resume its service late next month.
A Qantas spokesperson acknowledged the ACCC's draft determination, but claimed the partnership's benefits to tourism have been "significant".
"This tie-up was first approved in 2015 and, in that time, millions of customers have benefited from the coordination on flight schedules, frequent flyer programs and streamlined check-in and connections."
The ACCC is still seeking submissions until 6 October before making a final decision.
The lame kangaroo
The latest development continues a torrid run for the red kangaroo, which has faced scandal after scandal the past few weeks.
There was public fury over COVID-19 flight credits expiring at the end of the year, which the airline eventually backflipped on. The airline's lobbying on influential government figures was also under scrutiny after the transport minister denied rival Qatar Airways from adding more flights to Australia in the face of elevated fares for consumers.
Then the huge announcement from the ACCC came that it was taking the airline to court with allegations it had sold flights to the public that it knew had already been cancelled.
The consumer watchdog is seeking at least a $250 million fine from the case.
The pressure built up to the point that chief executive Alan Joyce departed early, although now his potentially huge payout is provoking shareholder and consumer outrage.
Then, earlier this week, the High Court denied the airline's appeal against the ruling that it had illegally sacked 1,683 employees to replace them with outsourced labour.
All this has meant the Qantas share price has plunged more than 16.4% since its 24 July peak, despite the company announcing a record profit during reporting season.
