China Eastern Airlines defends proposed partnership with Qantas

China Eastern Airlines said on Wednesday that its partnership with Qantas is designed to provide a better level of service to cater for increased travel demands as the result the Free Trade Agreement (FTA) between China and Australia.

The comments followed a preliminary ruling by the Australian Competition and Consumer Commission (ACCC) to reject a proposed coordination agreement between Qantas and China Eastern on flights to China.

The ACCC said it was concerned that Qantas and China Eastern Airlines control 80 percent of the Sydney-Shanghai route, and the proposed agreement would allow them to limit capacity and potentially lift prices on that route.

"They are the two major airlines on the route and the only airlines offering daily flights, and so the major competitive constraint on each other," ACCC chairman Rod Sims said. " Competition between them will be greatly reduced under the proposed agreement."

Submissions from interested parties in response to the ACCC's draft decision are due by April 8.

China Eastern Airlines Oceania Region said in a statement to Xinhua that there was already strong competition in the Australia- China market.

The company said there are already more than 20 airlines offering daily flights between China and Australia with stop overs via Guangzhou, Hong Kong and Singapore, and expect more airlines to follow.

"China Eastern Airlines and Qantas will follow up this issue and actively communicate with the ACCC and we hope that cooperation between the two companies will help determine a positive outcome to this matter," the statement said.

"Air travel is key to facilitating the increased traffic flows that will result from the Free Trade Agreement, and our proposed partnership with Qantas is about coordinating in order to provide a better level of service."

In November last year, Australia and China reached a free trade agreement (FTA) that will further promote the exchange of personnel and business between China and Australia and through close consultation, China Eastern Airlines and Qantas announced a joint marketing partnership program at the same time.

China Eastern Airlines said it was cooperating with Qantas in order to cater for an increasingly large amount of public and business travelers. It wants to provide individual visitors to open more direct routes to and from Australia, and to "provide the best moments, the best service, and the most excellent transit services".

"Both sides will be committed to providing richer and more consistent air transport services for passengers to and from China and Australia through cooperation between the two countries."

It is estimated that by 2020, Chinese tourists to Australia will bring 9 billion Australian dollars in revenue annually.