Qantas struggles to keep Africa duopoly deal
Qantas Airways (ASX: QAN) is having difficulties persuading authorities to award a two-year extension to its team up with South Africa Airways on the productive Australia-Africa route.
The competition regular has once more raised issues about Qantas and South Africa Airways' stranglehold on direct flights on the route as it believes carriers, such as Singapore Airlines, that travel to the continent through a third country offer only limited competition to the duopoly.
Qantas and South Africa Airways were the only carriers that provided direct flights until March when Virgin Blue's long-haul offshoot, V Australia, started offering the route. V Australia's impact, however, has still been relatively small as it has only two services per week between Melbourne and Johannesburg.
When Qantas and South Africa Airways last requested for an extension in their code-sharing deal in 2008, the International Air Services Commission said it would almost certainly have barred the agreement had Virgin Blue not flagged that it intended to fly to South Africa.
The Australia Competition and Consumer Commission said a rise in flights over the past year posed questions on the persisting need for code-sharing.
''The ACCC considers that the increase in capacity on the route has altered the competitive dynamics in such a way that the need for code-sharing arrangements between Qantas and SAA is likely to have diminished,'' it said.
The route has been one of Qantas's better-performing international operations during the global financial crisis, partly because of the duopoly with South Africa Airways. But Qantas argued in its application filed with the IASC in June that the weakness of South Africa's economy over the past two years had had a ''uniformly dampening effect'' on South Africans' ability to travel abroad.