Air China: we

By Chris Chamberlin , April 29 2015
Air China: we

With the Australian Competition and Consumer Commission moving to block Qantas’ proposed joint venture with China Eastern, Air China would consider stepping up if Qantas’ negotiations with the consumer watchdog came to a standstill.

“We do not rule out those possibilities,” Huang Bo, Chairman of the Air China Commercial Committee told Australian Business Traveller, adding that “there are lots of very good examples of cross-alliance operations.

“For example, Cathay Pacific – which belongs to Oneworld – has great cooperation with (Star Alliance member) Air China,” with arrangements covering lounge access, codeshare flights, frequent flyer ‘earn and burn’ and reciprocal shareholding between the two companies.

The ACCC claims that a closer Qantas/China Eastern tie-up would be of "significant public detriment" and would increase the airlines’ “ability and incentive to limit capacity and/or increase airfares on the Sydney-Shanghai route", despite this being the pair’s only common route.

While riling the ACCC, the proposed China Eastern joint venture has the public support of the Department of Infrastructure and Regional Development, Sydney Airport, the Australian and International Pilots Association, federal members of parliament plus and state and federal tourism bodies, which are also in favour of the move.

Qantas + Air China: a better fit?

While Air China also flies from Sydney to Shanghai three times per week with similarly-timed flights to Qantas, “the ACCC does not consider that Air China will sufficiently constrain Qantas and China Eastern in the event they decide to reduce or limit growth in capacity to increase airfares,” the ACCC said in its draft determination.

Air China already integrates with the Red Roo by way of an interline agreement for through-checked baggage for Australian domestic connecting passengers and the provision of Qantas-uniformed staff manning Air China’s check-in desks and boarding gates in Australia, although isn't currently a codeshare or frequent flyer partner of Qantas.

But even if a joint venture partnership with Air China came to fruition, Huang was quick to point out that “even if you have an alliance, you still face fierce competition.

“For example, for the European market we have Lufthansa – a close Star Alliance partner of Air China – and the competition between the two is still quite strong.”

Regarding a possible partnership with Air China, a Qantas spokesperson told Australian Business Traveller that “we are currently focused on our proposed joint venture with China Eastern and are in discussions with the ACCC about the draft determination.”

Also read: Air China goes daily on Melbourne flights to Beijing, Shanghai

Chris Chamberlin travelled to Beijing as a guest of Air China.

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Chris Chamberlin

Chris Chamberlin is the Associate Editor of Executive Traveller, and lives by the motto that a journey of a thousand miles begins not just with a single step, but also a strong latte, a theatre ticket, and later in the day, a good gin and tonic.

Qantas - Qantas Frequent Flyer

05 Feb 2013

Total posts 54

Why would Qantas enter into a JV with Air China. The best entry point into China for Qantas from a geographical perspective would be Hong Kong or Guangzhou. Shanghai is a second best choice, and transitting Beijing is the long way round for most of central and south China.

If they can't do a deal with China Eastern or China Southern, the obvious candidate would be Cathay Pacific. But they won't do a deal with Cathay! So why would they do a deal with Air China given Air China's Beijing hub and the cross shareholding between Air China and Cathay Pacific?

30 Aug 2013

Total posts 448

Doesnt Air China also hub at PVG? The only Guangzhou hub as far as I know is China Eastern which is not an airline any premium pax want to fly.

Cathay is the obvious choice but they have absolutely no intention of doing anything with Qantas.

Indeed it does – Air China has hubs in both Shanghai and Beijing and serves Australia with flights from both of these cities.

Qantas' only destination in mainland China operated on its own aircraft is Shanghai, but it also flies to neighbouring Hong Kong from Sydney, Melbourne and Brisbane.

21 Sep 2011

Total posts 65

CA only offers very limited services out of PVG compared to MU. I wouldn't consider it a hub. 

If VA is listening they should really step in before it's too late.  

KK
KK

Air China - Phoenix Miles

20 Dec 2012

Total posts 106

CA serves Frankfurt, Munich, Paris and Milan from PVG, along with cities in South Korea and Japan. All these flights depart in the midnight, providing good connection for Sydney-Shanghai flight.

 

Agreed that China Eastern offers many more destinations out of Shanghai than Air China (Shanghai being China Eastern's primary hub), although with Air China serving around 30 destinations from Shanghai, it's far from terrible as far as secondary hubs go.

21 Sep 2011

Total posts 65

I counted roughly 20 domestic CA destinations out of Shanghai and many dapart from a different airport (SHA). If QF wanted domestic connections, they should look no further than Juneyao Airlines. More than 30 domestic destinations and growing rapidly. Unfortuately it would appear Juneyao is going the Star Alliance way. Don't think QF will have a chance but VA might if they are interested. JB's comment on SQ alliance serving China adquately is rather ridiculous.  

Qantas - Qantas Frequent Flyer

05 Feb 2013

Total posts 54

Why would Juneyao be of interest to QF? QF already has code-share arrangements with MU on domestic routes from Shanghai. QF wanted to move from code-sharing to a JV under which they could co-ordinate pricing and schedules etc. QF can continue the code-share arrangements with MU. Juneyao doesn't fly to Australia, so QF can't form a JV with Juneyao.

What would QF gain from ditching the current arrangements with MU and start code-sharing with Juneyao.

21 Sep 2011

Total posts 65

You misunderstood. I meant if they wanted to pick CA they might as well team up with Juneyao. Of course, MU remains the best option in Shanghai. 

Virgin Australia - Velocity Rewards

19 Mar 2014

Total posts 574

It's only a matter of time before VA step in.

SYD > HKG daily once the 777 undergoing heavy maint is back in action. Etihad to retain the SYD > AUH service it's currently covering.

Qantas - Qantas Frequent Flyer

05 Feb 2013

Total posts 54

It's my understanding that the proposed JV was about serving the Australia-China market, so Qantas needs a partner with a hub that has comprehsive and convenient domestic connections. Services to Frankfurt, Munich, Paris, Milan etc are not relevant to such a JV.

Virgin Australia - Velocity Rewards

19 Mar 2014

Total posts 574

Agree. There are many, less convoluted ways to get to the above. It's about a comprehensive distribution network into China and a broad funnel to channel Chinese travellers into the Australia network.

I'm also of the belief that a JV doesn't curtail competition. Qantas are directly incentivised to have passengers fly on their metal. Same with China Eastern. 

07 Aug 2012

Total posts 197

A QF-CX deal would never get approval if this QF-MU partnership was suspected of being bad for consumers. There's no other non-stop competition between AU & HK.

29 Aug 2014

Total posts 16

QF-CX deal would never happen with all the bad blood over JQHK and CX's 70 flight/week cap to Australia.

12 Dec 2012

Total posts 982

Why?

CX wants more flights to Australia.

Australia is not using all of it's flight rights to HK. If done the right way, QF could increase flights to HK, CX can codeshare on them and get access to the Australian HK flight rights.

Is the objective of the QF-MU venture to:

  1. Provide greater choice and flexiblity to customers, or
  2. Corner the market and dictate prices, in particular in the premium cabin?

To the layman it would seem the rational is skewed towards the latter rather than former.

Consequently, if the intention is (2), is there even a need to consider a tie-up with CA?

Can CA offer to QF what is can't already do by tapping into KA's network? Is having a codeshare arrangement with KA for mainland services so frought with difficulties as to justify the cost of JVs with MU or CA, if in fact the provision of greater choice is the real reason for such JVs?

Qantas - Qantas Frequent Flyer

28 Feb 2014

Total posts 146

I'll be happy with flights to Brisbane :).

29 Aug 2014

Total posts 16

I hope QF isn't dumb enough to take up the offer. Or else JQHK's toast and we here in HKG will continue to have to play CX's games.


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