ICCC Allows Air Niugini To Code-Share With Fiji Airways

The Independent Consumer and Competition Commission (ICCC) wishes to inform key stakeholders and the general public that the ICCC has granted Authorization to Air Niugini Limited (Air Niugini) to enter into and give effect to a code-share agreement with Fiji Airways Limited on the Port Moresby (PNG) to Nadi (Fiji) route via Honiara.

ICCC Commissioner and Chief Executive Officer, Mr. Paulus Ain said that on the 14th December, 2017, the ICCC received an application for Authorization from Air Niugini for it to enter into and give effect to a code-share agreement with Fiji Airways for a period of three years.

“The application was made pursuant to Section 70 of the Independent Consumer and Competition Commission Act 2002 (ICCC Act). 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.” Commissioner Ain said.

In assessing this application, the ICCC conducted a wider public consultation. The ICCC also released its Draft Determination for public and stakeholders’ comments on its assessment of the application and its reasoning for its proposed decision. The views of industry participants as well as other interested stakeholders were taken into consideration in finalising this Determination.

Commissioner Ain said: “The ICCC has considered the principal market to be the market for the provision of air passenger services between Port Moresby and Fiji. 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 (POM/NAN) route (via Honiara). Therefore, the ICCC believes this code-share arrangement would provide an opportunity for another carrier in Fiji Airways to enter the market through partnering with Air Niugini; and eventually grow its market share on the route; and may enter into a more competitive form of code-share arrangement or enter the market as an independent carrier.

In its assessment of the public benefits this code-share is likely to generate, the ICCC has considered that the following would be achieved in the long run:

• Travellers’ choice of marketing carriers would be increased (from one to two as currently it is only Air Niugini);
• The arrangement would develop the route and make Port Moresby as a transit hub for passengers from New Zealand, United States, Honiara, Fiji and other Pacific Island nations to Asia and vice versa. This would increase traffic volume through Port Moresby and make it possible for more frequent services therefore, reducing passenger flight times to Asian destinations. This outcome would also lead to cheaper fares in the long run as a result of increased passenger volumes;
• The possibility of Fiji Airways (and other Pacific carriers) to enter PNG market independently after growing its market share on this route; and
• Provision of direct and increased frequency services.

Besides other likely detriments that may result from this proposed code-share, the ICCC also noted that the ‘free sale’ code-share arrangement does not promote strong competition between the code-share partners.

Hence, to minimise any potential anti-competitive effects and other related detriments to the public, the ICCC has imposed certain conditions to the Authorization. Amongst others, the following are the key conditions;

• Air Niugini must price and sell its code-share services independently of Fiji Airways;
• Air Niugini must revise its wholesale prices offered to Fiji Airways down once profitability is reached through increased passenger and freight volumes;
• If, during the period of the Authorization, either of the parties increases airfares excessively without any valid justification on the code-share services, the ICCC will review the Authorization, pursuant to Section 80 of the ICCC Act, as such events may undermine the likely public benefits that this Authorization is based upon. The ICCC will then consider whether the balance between public detriment and public benefit still favours net public benefit;
• Air Niugini is to submit annual code-share passenger and freight traffic volume reports to the ICCC, for the POM/NAN route; and

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

(Source: Independent Consumer and Competition Commission [ICCC] News 04 June 2018)

The post ICCC Allows Air Niugini To Code-Share With Fiji Airways appeared first on Discover the South Pacific.

Source: Blog