ICCC plans to grant PNG Air, Virgin Australia code sharing

The Independent Consumer and Competition Commission (ICCC) has proposed to grant authorisation to PNG Air Limited (PNG Air) to give effect to a code-share agreement it has entered into with Virgin Australia for services between Port Moresby, PNG, and Brisbane, Australia. Picture: POST COURIER

PORT MORESBY, 22 FEBRUARY 2019 (POST COURIER) – The Independent Consumer and Competition Commission (ICCC) has proposed to grant authorisation to PNG Air Limited (PNG Air) to give effect to a code-share agreement it has entered into with Virgin Australia for services between Port Moresby, PNG, and Brisbane, Australia.

Commissioner and chief executive officer Paulus Ain said: “While acknowledging that free sale code-share arrangement is not very competitive, the arrangement will allow a new marketing carrier to enter the market.

“The ICCC considers that in the present circumstances, it is better to have PNG Air start with the free sale arrangement.”

It has considered that the following public benefits are likely to result if the parties provide the code-share services: Travelers’ choice of marketing carriers would be increased (from three to four; travelers’ would benefit from competitive airfares; direct connections and ease of luggage transfers for PNG Air’s domestic services; making Port Moresby as a transit hub; code-sharing would result in aggressive competition; increasing domestic competition; increase Port Moresby traffic for frequent service.

On the other hand, the ICCC noted that the following public detriments are likely to result; however, these are outweighed by the mentioned public benefits: Infrastructural barriers such as the availability of slots at the Port Moresby Jackson’s International airport.

The ICCC considers that despite the recent redevelopment at the Jackson’s airport, there was no evidence which suggested that slot availability was increased.

Another detriment was regulatory requirements such as airline designation and capacity requirements as per bilateral agreements between PNG and Australia can prove at times, to be a barrier to entry.

Before an airline could operate international services to another country, the government must first negotiate a treaty level agreement with the destination country’s government.