ICCC says benefits reason for freight code share deal

Business, Normal

The National, Friday March 7th, 2014

 THE benefits to the public from a freight code share agreement between Air Niugini and Qantas Airways have been the main consideration for the approval of a conditional authorisation to such an arrangement.

The code share deal was allowed by the Independent Consumer and Competition Commission (ICCC).

In a statement, ICCC said Air Niugini could now use the freight code share agreement  between Port Moresby and Brisbane using its wide body B787 aircraft until October next year, when the passenger code-share agreement ends.

Commissioner and chief executive Dr Billy Manoka said: “The public benefits resulting from the agreement outweigh the detriments that will result from the lessening of competition arising result from the collaboration of the two competitors, if the conditions imposed by the Commission are complied with.” 

Manoka said under the agreement, the code share would:

  • Allow competition between Air Niugini and Qantas for the provision of freight services on the Port Moresby-Brisbane route, as each airline independently sets prices (although the operating carrier effectively sets the ‘floor’ on prices), operates its own yield management system and sells its own product through its sales network; 
  • n Enable Air Niugini to receive a fixed stream of revenue as a set price is paid for weekly allotment of freight capacity to Qantas, regardless of the amount of the capacity actually used by Qantas, thus contributing to public benefits by supporting the economic sustainability of a state-owned enterprise; and
  • Facilitate the continued operations of the wide body aircraft by Air Niugini, which provides for higher volumes and lower cost air cargo movement and facilitates operation of Asian routes which depend on such an aircraft.