Is it time for the ACCC to lose its power to veto international JVs?

[RSVKanga]

That’s not the argument that was being proposed. The argument was that it was primarily against Qantas' interests and as a consequence, against the national interest

Just to confirm, you think that removing unnecessary local red tape to help Australian businesses be successful in a competitive global market is somehow not in Australia’s national interest?

 

[RooFlyer]

Just to confirm, you think that removing unnecessary local red tape to help Australian businesses be successful in a competitive global market is somehow not in Australia’s national interest?

Other than observing that 'removing red tape' (unnecessary or otherwise) hasn't appeared in this thread before and therefore can't be 'confirmed', I'll ask you to kindly keep waiting per post #46.

 

[TheRealTMA]

Just to confirm, you think that removing unnecessary local red tape to help Australian businesses be successful in a competitive global market is somehow not in Australia’s national interest?

Whenever I see or read or hear politicians using the phrase ”removing red tape”, I always think that means allowing the cowboys to run even more rodeos without regulation or oversight. So for example allowing QF to sack workers on a whim claiming need to improve bottom line, or lower wages for staff, illegally hoard landing slots, decrease safety standards in the name of competition and profit, etc.

 

[RSVKanga]

'removing red tape' (unnecessary or otherwise) hasn't appeared in this thread

There's this mind-blowing thing called summarising.

The ACCC's role, actions and intentions regarding QF's international commercial interests can quite clearly be summarised as counterproductive red tape. It prevents QF from having more partners, flying more passengers with additional frequencies and launching new QF routes/destinations, and hinders their profit.

And yes, Qantas profit is important (gasp!) to Australia and its economy, and it should be celebrated by all Australians.

 

[RooFlyer]

As much as I dislike being a bit-player in your prank ...

There's this mind-blowing thing called summarising.

Mind blowing when you make stuff up.

It prevents QF from having more partners, flying more passengers with additional frequencies and launching new QF routes/destinations, and hinders their profit gouging customers more than usual.

Fixed that for you.

And yes, Qantas profit is important (gasp!) to Australia and its economy, and it should be celebrated by all Australians.

Qantas' profit is only important to its shareholders and for the country, to the extent which it pays tax. And given the tax losses it has accumulated (accounting losses, while amazingly continuing to trade), it hasn't paid tax even after making a profit last year. Thanks dudes.

Qantas should have been allowed to sink during covid, when it abandoned Australians overseas (except when the govt paid it yet more money) while snorking up the public's $billion or so. Someone (QR?) would have bought the carcass and maybe given us a customer-focussed airline, which would be profitable because people wanted to fly the airline, not because it gouges everyone.

Time to tear up some more federal red-tape - the Qantas Sale Act - and let the market decide who should own it. Bain? QR? AA?

 

[RSVKanga]

Qantas' profit is only important to its shareholders and for the country, to the extent which it pays tax. And given the tax losses it has accumulated (accounting losses, while amazingly continuing to trade), it hasn't paid tax even after making a profit last year. Thanks dudes.

Qantas should have been allowed to sink during covid, when it abandoned Australians overseas (except when the govt paid it yet more money) while snorking up the public's $billion or so. Someone (QR?) would have bought the carcass and maybe given us a customer-focussed airline, which would be profitable because people wanted to fly the airline, not because it gouges everyone.

Time to tear up some more federal red-tape - the Qantas Sale Act - and let the market decide who should own it. Bain? QR? AA?

While I’m not going to respond to ridiculous and un-Australian content that makes up the bulk of your comment, I’d like to touch on this small thing

let the market decide

See, while international aviation isn’t a free-for-all, Australian domestic aviation is a free market and Qantas has a 65% market share but you support ACCC break up powers because their market share is too big domestically and they’re a big baddie that must be forced to divest Jetstar . Isn’t that against the rules of the ‘free market’ that you claim to support?

Why not let the market decide! If the majority of Australian domestic travellers prefer Qantas/Jetstar over Virgin and others, so be it! Why don’t you support the free market! Based on the market behaviour, it’s clear that Australians are happy with a QF-dominant duopoly and don’t want more airlines domestically, which is why Bonza joins Tigerair, AirAustralia, OzJet and the long list of unsuccessful new airline attempts. Rex could well be next.

 

[RooFlyer]

but you support ACCC break up powers because their market share is too big domestically and they’re a big baddie that must be forced to divest Jetstar

Do I? How fascinating

Isn’t that against the rules of the ‘free market’ that you claim to support?

Is it? Do I? Enchanting.

Why not let the market decide! If the majority of Australian domestic travellers prefer Qantas/Jetstar over Virgin and others, so be it!

Err... yes. And the problem is?

Look, I realise this is just one big running gag but to make it interesting for the folks following along, perhaps you might put a bit of subtlety into it?

 

[Forg]

Qantas only has 2/3 of the market because it’s difficult to start up in the aviation market, and because the government (ie. Australian taxpayers) paid for them to exist until 40-odd years ago. The fact there’s been so little real competition in that time proves how hard it is to enter that market (partially due to all the $$ my parents paid for Qantas to own the market).
So an anti-monopoly organisation should be dealing with that artificiality … let’s call it “monopoly” … we paid for them to be there, then they shaft us when there’s limited competition.

 

[Quickstatus]

un-Australian content

Un-Australian = Mass illegal sacking or workers + advertising tickets on flights the airline had decided to cancel

Why not let the market decide!

Correct. Joint Ventures reduce market competition especially when dominant players are involved.

 

[justinbrett]

This is a fundamental misunderstanding of how codeshares and JVs operate. VA and QR (same as VA with UA and SQ) have a freesale codeshare with some caveats. Firstly, it doesn't involve any joint pricing! VA has no engagement with QR, UA & SQ on pricing. When selling a ticket that may involve a VA segment, QR, UA & SQ can seek whatever prices they wish from an itinerary and compensate VA based on the published fare. VA can't influence that. When VA sell a QR, UA & SQ segment under their own ticket, they do the same. There are no joint fares - just have a look at the VA fare rules!

I never said VA/QR was a JV. Quite the contrary, I said the QF/EK deal isn't what most people think of when they think of a JV, in that QF metal competes with EK metal.

That's very different from a JV. For example, all of QF's Australia-Europe fares are listed as QF/EK fares allowing a multitude of permutations ticketing on QF or EK stock. While the fares list other airlines as being combinable, QF fares are only ticketable on QF or EK. This is indicative of pricing coordination and typically found for JV arrangements.

That's incorrect. QF has two fare groups from SYD-LHR, the ones ending in QF (or QFO for one way) can't be used on EK coded flights or QF coded flights operated by EK. The separate fares ending in EU(O) can. So really, the JV is for pax who choose to fly with EK booking with QF; not the ones booking only on QF metal. And considering QF don't fly to DXB, what capacity is being coordinated here?

Have a look and you'll often see AA pricing the same QF flight differently - are you suggesting they're not coordinating and not operating a JV?

No, because they have a revenue sharing JV.

 

[evanb]

I never said VA/QR was a JV. Quite the contrary, I said the QF/EK deal isn't what most people think of when they think of a JV, in that QF metal competes with EK metal.

You explicitly stated that the QF-EK JV "is not much different to VA/QR, while they can coordinate on pricing and scheduling I don’t see much of that going on." That statement is categorically rubbish, your follow-up while trying to somehow highlight my example as false de facto acknowledges coordination on scheduling and pricing, nevermind direct coordination on trans-Tasman capacity.

Sure, it's not revenue sharing, but revenue sharing isn't actually the part of the JV that requires ACCC approval. The part that they seek the ACCC approval for is ... coordination on pricing and scheduling! It's not the revenue sharing part that makes it a JV and not having revenue sharing doesn't make it anything like a freesale codeshare. The key different is that VA don't have pricing authority what they sell on behalf of QR or what QR sell VA tickets for.

That's incorrect. QF has two fare groups from SYD-LHR, the ones ending in QF (or QFO for one way) can't be used on EK coded flights or QF coded flights operated by EK. The separate fares ending in EU(O) can. So really, the JV is for pax who choose to fly with EK booking with QF; not the ones booking only on QF metal. And considering QF don't fly to DXB, what capacity is being coordinated here?

Literally, QF fares can be issues on EK stock. We're not talking an QF code being issues on EK stock, but QF fare.

And ... um, how do I say this. The QFO fares are for UK only, and as has been discussed many times before, QF's UK flights are not part of the JV (even though they could be, but EK simply don't want to have anything to do with this). That's not the European fares. The European fares are EUO which are the JV fares.

I suspect you have a particular understanding of what a JV is. I agree that it isn't a binary construct, but the point still stands that the QF-EK relationship is nothing similar to QR-VA.

 

[justinbrett]

You explicitly stated that the QF-EK JV "is not much different to VA/QR, while they can coordinate on pricing and scheduling I don’t see much of that going on." That statement is categorically rubbish, your follow-up while trying to somehow highlight my example as false de facto acknowledges coordination on scheduling and pricing, nevermind direct coordination on trans-Tasman capacity.

Sure, it's not revenue sharing, but revenue sharing isn't actually the part of the JV that requires ACCC approval. The part that they seek the ACCC approval for is ... coordination on pricing and scheduling! It's not the revenue sharing part that makes it a JV and not having revenue sharing doesn't make it anything like a freesale codeshare. The key different is that VA don't have pricing authority what they sell on behalf of QR or what QR sell VA tickets for.



Literally, QF fares can be issues on EK stock. We're not talking an QF code being issues on EK stock, but QF fare.

And ... um, how do I say this. The QFO fares are for UK only, and as has been discussed many times before, QF's UK flights are not part of the JV (even though they could be, but EK simply don't want to have anything to do with this). That's not the European fares. The European fares are EUO which are the JV fares.

I suspect you have a particular understanding of what a JV is. I agree that it isn't a binary construct, but the point still stands that the QF-EK relationship is nothing similar to QR-VA.

The IATA doesn’t even have a definition for a Joint Venture. So yes, it’s entirely up for interpretation.

I consider it by the plain language definition - are QF and EK working together to provide services to transport pax between Australia and Europe? Categorically no. EK is doing all of the flying, and QF gets a cut of the fares they sell. Exactly how VA gets a cut of the QR fares it sells.

This is completely different to the previous QF/BA JV or the current QF/AA JV, where both carriers work together to have complimentary schedules and capacity, that together can provide a seemless expwrience for pax regardless of the metal they fly on or carrier they book with.

A pax who books a QF fare to LHR cannot travel on EK metal unless the fare is changed to the EU fare. It’s literally written into the conditions of the fare.

 

[evanb]

A pax who books a QF fare to LHR cannot travel on EK metal unless the fare is changed to the EU fare. It’s literally written into the conditions of the fare.

You're literally describing the use of a JV fare here. Specifically how they have non-JV and JV fares and how if they want to combine EK metal onto a QF fare they must ... use the JV fare.

I consider it by the plain language definition - are QF and EK working together to provide services to transport pax between Australia and Europe? Categorically no. EK is doing all of the flying, and QF gets a cut of the fares they sell. Exactly how VA gets a cut of the QR fares it sells.

Not quite. VA get a cut, but they don't get any say in the pricing. QF and EK agree on the pricing, how they want to vary it, fragment it, adjust it, etc. Or they can discuss if they don't want to on specific routes. VA and QR do not discuss pricing or coordinate, QR are the price setter, and VA the price taker.

 

[justinbrett]

You're literally describing the use of a JV fare here. Specifically how they have non-JV and JV fares and how if they want to combine EK metal onto a QF fare they must ... use the JV fare.

Yes as I’ve said all along. QF ops are separated into the EK JV (EK metal only) and QF metal routes. And I’m saying it’s not much of a JV went all of the metal is provided by EK.

Not quite. VA get a cut, but they don't get any say in the pricing. QF and EK agree on the pricing, how they want to vary it, fragment it, adjust it, etc. Or they can discuss if they don't want to on specific routes. VA and QR do not discuss pricing or coordinate, QR are the price setter, and VA the price taker.

In theory - but you don’t think it’s EK wearing the pants discussing pricing for SYD-DXB-CDG? Of course they are. The QF fares are linked to the EK metal fares.

Also have you noticed on the QF website, the EK options are always listed at the bottom, after QF and all other oneworld options, even if the EK option is cheaper?

 

[evanb]

Yes as I’ve said all along. QF ops are separated into the EK JV (EK metal only) and QF metal routes. And I’m saying it’s not much of a JV went all of the metal is provided by EK.

All JVs work like this, even revenue neutral JVs. But I'm not debating this. You're shifting the goalposts. Your original argument was that QF-EK was functionally the same thing as VA-QR. We've established it's not. I'm not trying to debate that the the QF-EK is the same as QF-AA. All JVs are different, but it's still a JV in that they can and do coordinate on pricing.

In theory - but you don’t think it’s EK wearing the pants discussing pricing for SYD-DXB-CDG? Of course they are. The QF fares are linked to the EK metal fares.

Most JVs are unbalanced like this. There are always partners who are more invested than others, more interested in protecting their metal routes, etc. This is not new or unusual. Of course EK is wearing the pants since it's their capacity. While the airlines can discuss and coordinate, it's still the operating carrier's decision what capacity to run. This is no different so any other JV. QF can push AA to fly DFW-BNE, but it's still AA to make the decision on it.

Also have you noticed on the QF website, the EK options are always listed at the bottom, after QF and all other oneworld options, even if the EK option is cheaper?

And what does that have to do with anything in this discussion? The whole all part of the whole NDC push where airlines can be far more controlling over everything about distribution. Expect airlines to be a lot more cunning in the way they present capacity and fares. Even in a revenue neutral JV with overlapping routes, they'll still favor their metal in a like-for-like situation.

 

[justinbrett]

All JVs work like this, even revenue neutral JVs. But I'm not debating this. You're shifting the goalposts. Your original argument was that QF-EK was functionally the same thing as VA-QR. We've established it's not. I'm not trying to debate that the the QF-EK is the same as QF-AA. All JVs are different, but it's still a JV in that they can and do coordinate on pricing.

And I maintain it’s functionally the same as in both cases it’s the Australian carrier reselling tickets on the ME carrier.

You’re stuck in this trench arguing about pricing and capacity scheduling when in the context of European services there isn’t much to coordinate, as it’s just EK doing what it wants and QF taking a cut. It’s very much unlike the JVs most people think of where the carriers will manage their routes and capacity to provide a holistic service where the pax can be agnostic on the carrier providing the service.

And what does that have to do with anything in this discussion? The whole all part of the whole NDC push where airlines can be far more controlling over everything about distribution. Expect airlines to be a lot more cunning in the way they present capacity and fares. Even in a revenue neutral JV with overlapping routes, they'll still favor their metal in a like-for-like situation.

It highlights what I’ve been saying that QF and EK are in competition with each other, which is very much not like most JVs.

QF lists the AA options in more or less equal standing with its own services.

 

[evanb]

And I maintain it’s functionally the same as in both cases it’s the Australian carrier reselling tickets on the ME carrier.

You’re stuck in this trench arguing about pricing and capacity scheduling when in the context of European services there isn’t much to coordinate, as it’s just EK doing what it wants and QF taking a cut. It’s very much unlike the JVs most people think of where the carriers will manage their routes and capacity to provide a holistic service where the pax can be agnostic on the carrier providing the service.

It highlights what I’ve been saying that QF and EK are in competition with each other, which is very much not like most JVs.

QF lists the AA options in more or less equal standing with its own services.

Have worked on the design and implementation of multiple joint ventures, and countless codeshare agreements, I can honestly say that you're talking the biggest load of rubbish. And that is the kindest way to say it.

You've provided no evidence that they're anything alike. What you did try to pass of as evidence of this showed the opposite, of coordinated JV fares alongside non-JV fare, that were also identically priced, showing a fare bit more integration than you're suggesting.

The type of JV you're describing is a idealistic type, but even some of the most integrated JVs don't get the holistic/agnostic service. While AA-QF is pretty good, there are huge imbalances in capacity that drive power and decisions. DL-VA was never close. DL-KE and DL-LA are not anything close to DL-AD-KL-VS. UA-NH is highlight integrated, yet pricing is quite independent once an onward NH leg gets involved. Then there are the JVs where there are overlapping non-JV codeshares which muddy the waters. I've worked on several of these, enough to know they're all different and none align to your stylized view. But also, none of them are anything close to a freesale codeshare. Just because you can't see matching pricing, doesn't mean there isn't extensive coordination of pricing and capacity.

And if you think that how they list fares on their website is a reflection of pricing coordination then you're really diving off the deep-end!

 

[justinbrett]

Have worked on the design and implementation of multiple joint ventures, and countless codeshare agreements, I can honestly say that you're talking the biggest load of rubbish. And that is the kindest way to say it.

You've provided no evidence that they're anything alike. What you did try to pass of as evidence of this showed the opposite, of coordinated JV fares alongside non-JV fare, that were also identically priced, showing a fare bit more integration than you're suggesting.

The type of JV you're describing is a idealistic type, but even some of the most integrated JVs don't get the holistic/agnostic service. While AA-QF is pretty good, there are huge imbalances in capacity that drive power and decisions. DL-VA was never close. DL-KE and DL-LA are not anything close to DL-AD-KL-VS. UA-NH is highlight integrated, yet pricing is quite independent once an onward NH leg gets involved. Then there are the JVs where there are overlapping non-JV codeshares which muddy the waters. I've worked on several of these, enough to know they're all different and none align to your stylized view. But also, none of them are anything close to a freesale codeshare. Just because you can't see matching pricing, doesn't mean there isn't extensive coordination of pricing and capacity.

And if you think that how they list fares on their website is a reflection of pricing coordination then you're really diving off the deep-end!

You’re making up your own debate now and not even reading my posts (my comment about the EK fare position was to illustrate that QF is in fact in competition with EK, very much the opposite of what most people consider what a JV is. It had nothing to do with pricing coordination).

I take you back to my original comment “what most people think of a JV”. You’re hung up with the technical definitions and that’s not what I’m talking about.

You can’t see the wood for the trees.

 

[evanb]

You’re making up your own debate now and not even reading my posts (my comment about the EK fare position was to illustrate that QF is in fact in competition with EK, very much the opposite of what most people consider what a JV is. It had nothing to do with pricing coordination).

I take you back to my original comment “what most people think of a JV”. You’re hung up with the technical definitions and that’s not what I’m talking about.

You can’t see the wood for the trees.

You just keep making things up. Your exact words in your initial statement that I challenged was that it isn’t a JV “under the normal definition of a JV”. But as you have since acknowledged, there is no normal definition, but yet you‘re still trying to argue that since it isn’t like a revenue neutral one that is doesn’t count.

I’m not hung up about the technical definition. I suspect you are and missing the point: even as a non-metal neutral or non-revenue sharing JV, it’s still a lot more coordinated on pricing than free sale codeshares. The different is who sets prices and how they’re set. One could argue that a free sale is actually better than what QF have, but that’s besides the point. I’m not arguing that QF-EK is a highly integrated JV, I’m arguing that it’s not anything similar to free sale codeshare type agreement that QR-VA have. The point is they are dramatically different.

In addition to joint fares, which QR-VA don’t have, they do coordinate on scheduling too, just not the way you want to understand (you only see it on overlapping, which this JV isn’t about). They meet to coordinate feed onto EK in Aus to Europe. They’ve literally done this recently!

My worry here though is that you just keep making things up and then change your tune when it’s pointed out. Some of your fibs are pretty wild, like there are no geographic restrictions and they could coordinate to the US. I mean, other than the ACCC decision explicitly limiting geography to routes between Australia and the UK/Europe, New Zealand, Asia, the Middle East and North Africa, and other than them not having US DOT approval, they could …

 

[justinbrett]

You just keep making things up. Your exact words in your initial statement that I challenged was that it isn’t a JV “under the normal definition of a JV”. But as you have since acknowledged, there is no normal definition, but yet you‘re still trying to argue that since it isn’t like a revenue neutral one that is doesn’t count.

I’m not hung up about the technical definition. I suspect you are and missing the point: even as a non-metal neutral or non-revenue sharing JV, it’s still a lot more coordinated on pricing than free sale codeshares. The different is who sets prices and how they’re set. One could argue that a free sale is actually better than what QF have, but that’s besides the point. I’m not arguing that QF-EK is a highly integrated JV, I’m arguing that it’s not anything similar to free sale codeshare type agreement that QR-VA have. The point is they are dramatically different.

In addition to joint fares, which QR-VA don’t have, they do coordinate on scheduling too, just not the way you want to understand (you only see it on overlapping, which this JV isn’t about). They meet to coordinate feed onto EK in Aus to Europe. They’ve literally done this recently!

My worry here though is that you just keep making things up and then change your tune when it’s pointed out. Some of your fibs are pretty wild, like there are no geographic restrictions and they could coordinate to the US. I mean, other than the ACCC decision explicitly limiting geography to routes between Australia and the UK/Europe, New Zealand, Asia, the Middle East and North Africa, and other than them not having US DOT approval, they could …

You have no idea what you’re talking about. I recall it was you who posted an article on your own website as a source for a post you made on another topic. It’s obvious you see yourself as an authority but your words do not back that up.

Go and read the ACCC authorisation and show me where it says there’s a geographic restriction. It’s not there. In fact there’s a footnote saying the ACCC doesn’t feel the need to define the boundaries of the relevant markets. Yes the airlines have specified the markets as per the QF website but nowhere in the authorisation is that included. The conduct specifically states a global network for QF and EK passengers.

Functionally for pax the two arrangements are very similar for European routes. You can write a thesis on how it’s so different, but if VA and QR got the same authorisation that QF and EK have there’d be very few noticeable differences to the average pax.