More airline tie-ups ahead and 'travellers will benefit'

The study by the Competition Commission of Singapore found that tie-ups can generate “substantial benefits” for consumers, such as lower air fares, better service and greater connectivity choice. -- ST FILE PHOTO
The study by the Competition Commission of Singapore found that tie-ups can generate “substantial benefits” for consumers, such as lower air fares, better service and greater connectivity choice. -- ST FILE PHOTO

Study by competition watchdog finds they will bring more good than harm

Travellers in Singapore can expect more airline tie-ups that can lead to lower fares and other benefits such as shorter waits between connecting flights.

Singapore's competition watchdog is satisfied that such link-ups, though inherently anti-competitive, bring more good than harm.

It reached this conclusion after carrying out a study last year, in anticipation of a boom in airline partnerships, given the growing Asia-Pacific air traffic.

Carriers keen to ink alliances can expect speedier approvals in future, the Competition Commission of Singapore told The Straits Times yesterday.

The amount of time needed for approval will vary from case to case, it added.

Joint-venture agreements, especially those which involve close coordination of pricing, marketing and sales, usually see airlines cooperating instead of competing in various aspects, a spokesman for the commission said.

But these can generate "substantial benefits" for consumers, such as lower air fares, better service and greater choice in terms of flight connectivity, she added.

The year-long study by the watchdog included interviews with airlines and other stakeholders as well as an assessment of existing carrier tie-ups.

Last September, for example, the commission approved a tie-up between Qantas Airways and its low-cost arm Jetstar Airways in operational cooperation. The Jetstar group includes Singapore's Jetstar Asia.

Air travel in the Asia-Pacific expanded 7.1 per cent last year over the previous year to outpace global growth of 5.2 per cent and it is expected to continue growing.

The push for integration and open skies between the 10-member Asean grouping will continue to drive consolidation and increased cooperation and competition among Asian carriers, the commission said.

Passengers today expect "from anywhere to anywhere" service and this is difficult for any one airline to supply efficiently, said its spokesman.

The competition watchdog has approved nine airline tie-ups - mainly in the last three years.

The most recent is the link-up between Singapore Airlines (SIA) and Air New Zealand to jointly market and sell their Singapore-New Zealand flights.

Alliances with like-minded partners are a key strategy for SIA, its chief executive officer Goh Choon Phong has said.

"These arrangements enable us in some cases to extend our network to points that are not commercially viable to serve with our own aircraft, and in other cases, to offer additional travel windows on existing routes to our customers," he said recently.

From next month, for example, SIA travellers will have access to 23 new destinations in 11 countries, including Turkey, Bulgaria, Portugal and Ghana.

This is the result of a tie-up with Turkey's national carrier. SIA customers will be able to hop onto flights operated by Turkish Airlines - both domestically in Turkey and internationally.

Singapore Airlines now has such code-sharing ties with about 25 airlines, to offer nearly 3,000 weekly round-trip flights - around four times the number of weekly round-trip flights operated solely by SIA.

Mr Seah Seng Choon, executive director of the Consumers Association of Singapore (Case), said that tie-ups between airlines can "enhance the overall travel experience" if the result is convenience and ease for consumers.

"But we must be mindful that such tie-ups do not create a single dominant group.

"Consumers must always have varied options and there must be a level playing field between different airlines or groups of airlines so there is real choice for travellers," he stressed.

karam@sph.com.sg