By Matt O'Sullivan
QANTAS faces a challenge convincing authorities to grant a two-year extension to its tie-up with South Africa Airways on the lucrative Australia-Africa route.
The competition regulator has again raised concerns about Qantas and South Africa Airways' stranglehold on direct flights on the route. The regulator believes carriers such as Singapore Airlines that fly to the continent via a third country offer only limited competition to the two incumbents.
Dogfight for Qantas route.Credit: Andrew Quilty
Qantas and South Africa Airways were the only airlines that offered direct flights until March when Virgin Blue's long-haul offshoot, V Australia, began flying on the route. But V Australia's impact has still been relatively minor as it has only two services a week between Melbourne and Johannesburg.
When Qantas and South Africa Airways last sought to extend their code-sharing agreement in 2008, the International Air Services Commission (IASC) said it would almost certainly have blocked the deal had Virgin Blue not signalled that it planned to fly to South Africa.
In a submission to the commission about the latest application from Qantas for a two-year extension, the Australia Competition and Consumer Commission said an increase in flights over the past year raised questions about the continuing need for code-sharing.
''The ACCC considers that the increase in capacity on the route has altered the competitive dynamics in such a way that the need for code-sharing arrangements between Qantas and SAA is likely to have diminished,'' it said.
The route has been one of Qantas's better-performing international legs during the global downturn, partly because of the dominance with South Africa Airways. However, Qantas said in its application filed with the IASC in June that the weakness of South Africa's economy over the past two years had had a ''uniformly dampening effect'' on South Africans' ability to travel abroad.