Airline joint ventures and competition law regimes in Asia Pacific

CPI Asia Column edited by Vanessa Yanhua Zhang (Global Economics Group) present:

Airline joint ventures and competition law regimes in Asia Pacific – By Pearl Yeung (Norton Rose Fulbright LLP, Hong Kong)

Volatility in the air transport industry has often rendered the financial health of airlines precarious, leading to constant pressure on carriers to lower their cost base.  Responding to these pressures, the Asia Pacific region has observed a recent surge in consolidation through alliances.  Exploring beyond these industry developments into the regulatory sphere, China’s National Development and Reform Commission (NDRC) has also recently initiated a consultation in respect of its Guidelines on General Conditions and Procedures for the Exemption of Monopoly Agreements (Consultation draft), rendering it an opportune time to examine the impact of competition law regimes on airline cooperation arrangements affecting markets in the region.

While ownership and air traffic restrictions continue to dictate the ability and extent to which airlines are able to combine their operations through mergers and acquisitions, joint operation service agreements (so-called “metal-neutral” joint ventures) have recently gained in popularity to replace inter-airline codeshare agreements, a previously prevalent form of cooperation.

Airline joint ventures are known to be more advanced forms of codeshare agreements.  They envisage, at least in theory, an even higher degree of cooperation