Airlines get POM-Fiji go-ahead

The National Business

The Independent Consumer and Competition Commission (ICCC) has allowed Air Niugini to enter a code-share agreement with Fiji Airways on a Port Moresby-Nadi (Fiji) service via Honiara.
On Dec 14, 2017, the commission received an application from Air Niugini for a code-share agreement for a period of three years.
“This code-sharing arrangement is the first between Air Niugini and Fiji Airways since their existence. Air Niugini will be operating the services between Port Moresby and Nadi,” ICCC commissioner and chief executive Paulus Ain said.
The ICCC conducted a wide public consultation process before saying yes. The views of industry participants and other interested parties were also taken into account.
“The ICCC has considered the principal market to be the market for the provision of air passenger services between Port Moresby and Fiji,” Ain said.
“It is also considered that the services from Australian ports to Fiji may have some competitive pressure on the principal market.
“For the purposes of assessing this application, the ICCC has considered the relevant market is the provision of regular air passenger services between PNG and Fiji, in particular, the Port Moresby and Nadi ports.”
Currently, only Air Niugini is servicing the Port Moresby-Nadi route (via Honiara).
The ICCC believes the code-share arrangement would provide an opportunity for Fiji Airways to enter the market in partnership with Air Niugini and eventually grow its market share on the route.
It sees the potential for Fiji Airways to enter into a more competitive form of code-share arrangement or even enter the market as an independent carrier.
ICCC believes such an arrangement would, in the long-run:

  • Improve the travellers’ choice of airlines;
  • Develop the route and make Port Moresby a transit hub for passengers from New Zealand, United States, Honiara, Fiji and other Pacific Islands nations to Asia and vice versa;
  • Help increase traffic volume through Port Moresby and make more frequent services possible, therefore reducing passenger flight times to Asia;
  • Lead to cheaper fares as a result of increased passenger volumes;
  • Increase the possibility of Fiji Airways and other Pacific carriers to enter the PNG market independently after growing its market share on this route; and
  • Provide more direct flights between Fiji and Papua New Guinea.

The ICCC noted that the ‘free sale’ code-share arrangement does not promote strong competition between the code-share partners.
Therefore, to minimise any potential anti-competitive effects and promote benefits to the public, the ICCC imposed conditions, like:

  • Air Niugini must price and sell its code-share services independently of Fiji Airways;
  • Air Niugini must revise down its wholesale prices offered to Fiji Airways once profitability is reached through increased passenger and freight volumes;
  • If, during the period of the authorisation, either of the parties increases airfares excessively without any valid justification, the ICCC will review the authorisation as such events may undermine the likely public benefits that this authorisation is based upon. The ICCC will then consider whether the balance between public detriment and public benefit still favours net public benefit; and
  • Air Niugini is to submit annual code-share passenger and freight traffic volume reports to the ICCC, for the route.

“Overall, the ICCC is satisfied that this code-share arrangement will result in more benefits to the public, outweighing the potential detriments to competition in the market and other detriments,” Ain said.
“The ICCC therefore granted authorisation for a period of three years.”