PX proposed code-share with Philippines airline declined
Competition regulator, the Independent Consumer and Competition Commission (ICCC) proposes to decline authorizing Air Niugini Limited to partner with Philippine Airlines to provide code-share services between Port Moresby and Manila.
The ICCC is proposing this after assessing Air Niugini’s application and concluded that the POM/MNL route is already competitive; and introduction of this proposed code-share will stifle the current level of competition and reduce the current levels of benefits realized by the travelling public.
Commissioner and CEO, Paulus Ain said the ‘free sale’ code-share arrangement is not competitive hence, it will lessen the level of competition in the market.
“The ICCC considers that in the present circumstances, it is better to have Air Niugini and Philippine Airlines to continue to operate independently on the Port Moresby and Manila route,” Mr Ain said.
Consistent with its draft determination which was released on July 11, the ICCC considered that if the parties proceed with the code-share arrangement, the benefits resulting from this will not outweigh the benefits realised while the two airlines operate independently.
Mr Ain said with comments received from stakeholders and submissions from the parties, the ICCC assessed the application and is not satisfied that the code-share services, if authorized, would result in more benefits to the public.
The current market data on the route indicates that there is potential for growth in traffic volume because the volume has being increasing since Philippine Airlines entered the market independently.
It stated the current total of nine flights weekly is sufficient to maintain or improve the current level of services enjoyed by businesses and other travelers in both countries, using passenger air services on POM/MNL route.
“The ICCC does not have any information that suggests that, without the code-share, services will reduce in frequency,’’ the regulator stated.
“The structure of the proposed code-share agreement does not impose any significant costs on the airlines associated with unsold capacity, as distinct from a “hard block” basis were each airline commits to a certain level of capacity on the other airlines flights.
“Thus it provides little incentive for strong price competition.
While the proposed code-share may result in increased travel choice for the traveling public, particularly for loyalty program members, such arrangement is not likely to be good for consumers on a route that has only two players.
Reduction in airfares is unlikely to happen under the ‘free sale’ arrangement and there is risk of fares rising.’’