CCCS seeks feedback on proposed SIA-ANA joint venture

THE Competition and Consumer Commission of Singapore (CCCS) is seeking public feedback on a proposed joint venture (JV) framework agreement between Singapore Airlines (SIA) and Japan's All Nippon Airways (ANA).

Under the proposed partnership, which was entered into in January last year, the two carriers would work together on areas such as scheduling, pricing, sales and marketing as well as other commercial areas. This would also apply to their individual subsidiaries Air Japan Co and ANA Wings Co.

CCCS will be seeking feedback from June 21 to July 12, after receiving a joint application for decisions from both airlines on the proposed commercial cooperation. It has accepted the application as complete as of June 2.

In a release, it noted that the two airlines had said that the proposed commercial cooperation would result in "significant consumer and economic benefits" such as improved connectivity between the two countries, more competitive air fares, potentially increased frequencies on routes or the introduction of new services. There could also be benefits for members of both airlines' frequent flyer programmes as well as "significant" benefits for corporate account customers as they align their programmes for corporate clients.

Presently, SIA and ANA - both members of Star Alliance - overlap on eight routes, which are either direct services or involve one stop.

However, the two airlines have informed CCCS that the proposed JV is unlikely to adversely affect competition as any increment in the combined passenger share of the two airlines on five of the eight overlapping routes is minimal. In addition, "the parties will continue to face intense competition from competitors on the overlapping routes that are direct routes", they said, adding that the existing low barriers to entry on the overlapping routes would allow for entry by potential rivals.

Singapore's flag carrier already has JVs in place with Air New Zealand, Lufthansa and SAS.

Shares in SIA closed at S$4.98 on Monday, shedding seven Singapore cents or 1.39 per cent.