Sammyboy RSS Feed
20-03-2014, 04:50 PM
An honorable member of the Coffee Shop Has Just Posted the Following:
I was wondering why the hell the Competition Commission of Singapore will for no reason commission an expensive study on Joint venture between airlines in North America and Asia. What a waste of money when there are already so many studies out there on airline joint ventures and net benefits analysis.
CCS Releases Report on Findings From Aviation Market Study
18 March 2014
1. The Competition Commission of Singapore (“CCS”) recently concluded a market study on the aviation industry in Singapore which was conducted by external consultant, ICF SH&E. The study was commissioned as a post-action study on two of the airline joint venture (“JV”) agreements previously notified to and cleared by CCS, to determine the scale and scope of benefits arising from the JVs. The findings of the study showed that a Net Economic Benefit (NEB) did materialise from the formation of the JVs.
Trends & issues in the aviation industry
2. Over the past few years, alliances between airlines on international markets have become a dominant feature of the airline industry. Air travel has become increasingly commonplace, with today’s passenger expecting a ‘from anywhere to anywhere’ service. This is difficult for any one airline to supply efficiently, hence resulting in the trend of merging networks to enable significant economies of density. However, cross-border mergers in the airline industry are prohibited due to national ownership restrictions.
3. As such, the result is the formation of aviation alliance partnerships for substantial cooperation and integration (better known as airline JV agreements) as a close substitute for mergers. These airline JV agreements are inherently anti-competitive, as they typically involve price fixing, market sharing and/or output limitation, resulting in a reduction in competition on routes on which the JV partners overlap. However, there is a need to carefully assess such agreements, as they can sometimes generate substantial benefits to consumers, in the form of lower airfares, greater choice in terms of connectivity and better service. When such benefits arise, the airline JV agreement can be considered to result in a Net Economic Benefit (“NEB”), and may be granted antitrust immunity from CCS.
4. These forms of aviation agreements are expected to continue to come up, as the Asia-Pacific region is a growth area for airlines. Many Asian LCCs are expanding, global alliances continue to woo and welcome new Asian carriers as members. Air services liberalisation either bilaterally or multilaterally is set to continue. As such, ensuring fair and effective competition will grow in importance in a more liberalised air transport market.
Market study findings
5. To date, CCS has reviewed 8 airline JV agreements with the consideration that any substantial lessening of competition should be carefully weighed against the extent of consumer benefits that may result from cooperation, or NEB.
6. The study looked at two JVs which CCS had previously assessed in particular – Japan Airlines/American Airlines JV and United Airlines/Continental Airlines/All Nippon Airways JV. The findings show that there was indeed a NEB arising from both JVs, but that the magnitudes of benefits like an increase in passenger numbers and a decrease in fares were smaller than those established in western literature analysing airline JVs operating in USA / Europe. Particularly, the significant drop in passenger fares found in literature based on USA flight data were not replicated in JVs formed in, or operate in, Singapore and the Asia Pacific region. However, as the NEB test is all-encompassing and includes other measures of benefits like improved flight schedules and increased capacity, the two JVs were still determined by CCS as having resulted in NEB.
Conclusion
7. The implications of the study for CCS in assessing airline JVs in the future would be a smaller reliance on reported benefits of typical airline JVs based on solely on western literature, as well as a lower emphasis on a NEB argument that relies heavily on fare decreases, as impact on fares have been found to differ in each JV given different strategies adopted. CCS will continue to monitor developments in the aviation market in Singapore.
Further information on the findings of the study can be found on the CCS website here.
About The Competition Commission of Singapore (CCS)
CCS is a statutory board established under the Competition Act (Chapter 50B) on 1 January 2005 to administer and enforce the Act. It comes under the purview of the Ministry of Trade and Industry. The Act empowers CCS to investigate alleged anti-competitive activities, determine if such activities infringe the Act and impose suitable remedies, directions and financial penalties.
Than, 2 days later, we get a news article that Jetstar are pulling out of the SIngapore/Auckland route. jeez, what a coincidence. The CCS must run out and buy lottery right away. What foresight they have!! To commission a report on competition relating to airlines JV and lo and behold, we have a JV now between Air New Zealand and SQ. Maybe Jetstar told to fuck off a few months ago. Hardly competitive is it, CCS? Some fucktard scholar screwed up izzit? Aren't you supposed to order the study AFTER the news broke about the proposed JV betwee Air NZ and SQ, and not before?
Jetstar to dump Singapore to Auckland flights
DateMarch 20, 2014 - 12:57PM
Jetstar has ditched flights between Singapore and Auckland after struggling to make money on the route, reinforcing concerns that a tie up between Singapore Airlines and Air New Zealand will threaten competition.
Qantas' budget offshoot will stop flying on the route from July 21, and redeploy the twin-aisle A330s used on it to other routes including Melbourne-Tokyo and Brisbane-Bali.
The decision comes as Air New Zealand and Singapore Airlines seek approval from regulators to form an alliance on the route.
The airlines, which are two of the largest shareholders in Virgin Australia, have argued that the tie up will stimulate passenger traffic into and out of New Zealand, and lead to more low fares.
But it is understood the alliance was part of the thinking behind Jetstar's decision to pull off the route, realising it would have a better chance of making money elsewhere.
Singapore Airlines has said it plans to fly its A380 superjumbos on a daily basis between Singapore and Auckland if it gains approval to form an alliance with the Kiwi carrier.
Air New Zealand will also launch daily services between Auckland and the city-state using upgraded Boeing 777 aircraft, taking over five flights operated by Singapore Airlines and adding two more weekly flights.
Auckland Airport said Jetstar's decision confirmed concerns it had raised with regulators in New Zealand that the proposed alliance between Air New Zealand and Singapore Airlines could have ''detrimental impacts on the growth and promotion of competition in international air services''.
Subject to regulatory approval, Air New Zealand and Singapore Airlines have said they plan to eventually boost their existing capacity between New Zealand and Singapore by up to 30 per cent.
Jetstar began operating daily services between Singapore and Auckland three years before later reducing it to three flights a week.
''Unfortunately the route has not performed as we would have liked, and we have decided that the capacity could be put to better use on other routes,'' a spokesman said.
The flights are operated by Jetstar Airways, not its offshoot in Singapore which trades under the Jetstar Asia banner.
Qantas last month put the brakes on Jetstar Asia's expansion due to growing competition from incumbent airlines and new start ups, and the need to prioritise where it invest its capital. Qantas has a 49 per cent stake in Jetstar Asia.
Click here to view the whole thread at www.sammyboy.com (http://www.singsupplies.com/showthread.php?177541-This-is-how-the-PAP-smokes-and-manipulates-its-citizens&goto=newpost).
I was wondering why the hell the Competition Commission of Singapore will for no reason commission an expensive study on Joint venture between airlines in North America and Asia. What a waste of money when there are already so many studies out there on airline joint ventures and net benefits analysis.
CCS Releases Report on Findings From Aviation Market Study
18 March 2014
1. The Competition Commission of Singapore (“CCS”) recently concluded a market study on the aviation industry in Singapore which was conducted by external consultant, ICF SH&E. The study was commissioned as a post-action study on two of the airline joint venture (“JV”) agreements previously notified to and cleared by CCS, to determine the scale and scope of benefits arising from the JVs. The findings of the study showed that a Net Economic Benefit (NEB) did materialise from the formation of the JVs.
Trends & issues in the aviation industry
2. Over the past few years, alliances between airlines on international markets have become a dominant feature of the airline industry. Air travel has become increasingly commonplace, with today’s passenger expecting a ‘from anywhere to anywhere’ service. This is difficult for any one airline to supply efficiently, hence resulting in the trend of merging networks to enable significant economies of density. However, cross-border mergers in the airline industry are prohibited due to national ownership restrictions.
3. As such, the result is the formation of aviation alliance partnerships for substantial cooperation and integration (better known as airline JV agreements) as a close substitute for mergers. These airline JV agreements are inherently anti-competitive, as they typically involve price fixing, market sharing and/or output limitation, resulting in a reduction in competition on routes on which the JV partners overlap. However, there is a need to carefully assess such agreements, as they can sometimes generate substantial benefits to consumers, in the form of lower airfares, greater choice in terms of connectivity and better service. When such benefits arise, the airline JV agreement can be considered to result in a Net Economic Benefit (“NEB”), and may be granted antitrust immunity from CCS.
4. These forms of aviation agreements are expected to continue to come up, as the Asia-Pacific region is a growth area for airlines. Many Asian LCCs are expanding, global alliances continue to woo and welcome new Asian carriers as members. Air services liberalisation either bilaterally or multilaterally is set to continue. As such, ensuring fair and effective competition will grow in importance in a more liberalised air transport market.
Market study findings
5. To date, CCS has reviewed 8 airline JV agreements with the consideration that any substantial lessening of competition should be carefully weighed against the extent of consumer benefits that may result from cooperation, or NEB.
6. The study looked at two JVs which CCS had previously assessed in particular – Japan Airlines/American Airlines JV and United Airlines/Continental Airlines/All Nippon Airways JV. The findings show that there was indeed a NEB arising from both JVs, but that the magnitudes of benefits like an increase in passenger numbers and a decrease in fares were smaller than those established in western literature analysing airline JVs operating in USA / Europe. Particularly, the significant drop in passenger fares found in literature based on USA flight data were not replicated in JVs formed in, or operate in, Singapore and the Asia Pacific region. However, as the NEB test is all-encompassing and includes other measures of benefits like improved flight schedules and increased capacity, the two JVs were still determined by CCS as having resulted in NEB.
Conclusion
7. The implications of the study for CCS in assessing airline JVs in the future would be a smaller reliance on reported benefits of typical airline JVs based on solely on western literature, as well as a lower emphasis on a NEB argument that relies heavily on fare decreases, as impact on fares have been found to differ in each JV given different strategies adopted. CCS will continue to monitor developments in the aviation market in Singapore.
Further information on the findings of the study can be found on the CCS website here.
About The Competition Commission of Singapore (CCS)
CCS is a statutory board established under the Competition Act (Chapter 50B) on 1 January 2005 to administer and enforce the Act. It comes under the purview of the Ministry of Trade and Industry. The Act empowers CCS to investigate alleged anti-competitive activities, determine if such activities infringe the Act and impose suitable remedies, directions and financial penalties.
Than, 2 days later, we get a news article that Jetstar are pulling out of the SIngapore/Auckland route. jeez, what a coincidence. The CCS must run out and buy lottery right away. What foresight they have!! To commission a report on competition relating to airlines JV and lo and behold, we have a JV now between Air New Zealand and SQ. Maybe Jetstar told to fuck off a few months ago. Hardly competitive is it, CCS? Some fucktard scholar screwed up izzit? Aren't you supposed to order the study AFTER the news broke about the proposed JV betwee Air NZ and SQ, and not before?
Jetstar to dump Singapore to Auckland flights
DateMarch 20, 2014 - 12:57PM
Jetstar has ditched flights between Singapore and Auckland after struggling to make money on the route, reinforcing concerns that a tie up between Singapore Airlines and Air New Zealand will threaten competition.
Qantas' budget offshoot will stop flying on the route from July 21, and redeploy the twin-aisle A330s used on it to other routes including Melbourne-Tokyo and Brisbane-Bali.
The decision comes as Air New Zealand and Singapore Airlines seek approval from regulators to form an alliance on the route.
The airlines, which are two of the largest shareholders in Virgin Australia, have argued that the tie up will stimulate passenger traffic into and out of New Zealand, and lead to more low fares.
But it is understood the alliance was part of the thinking behind Jetstar's decision to pull off the route, realising it would have a better chance of making money elsewhere.
Singapore Airlines has said it plans to fly its A380 superjumbos on a daily basis between Singapore and Auckland if it gains approval to form an alliance with the Kiwi carrier.
Air New Zealand will also launch daily services between Auckland and the city-state using upgraded Boeing 777 aircraft, taking over five flights operated by Singapore Airlines and adding two more weekly flights.
Auckland Airport said Jetstar's decision confirmed concerns it had raised with regulators in New Zealand that the proposed alliance between Air New Zealand and Singapore Airlines could have ''detrimental impacts on the growth and promotion of competition in international air services''.
Subject to regulatory approval, Air New Zealand and Singapore Airlines have said they plan to eventually boost their existing capacity between New Zealand and Singapore by up to 30 per cent.
Jetstar began operating daily services between Singapore and Auckland three years before later reducing it to three flights a week.
''Unfortunately the route has not performed as we would have liked, and we have decided that the capacity could be put to better use on other routes,'' a spokesman said.
The flights are operated by Jetstar Airways, not its offshoot in Singapore which trades under the Jetstar Asia banner.
Qantas last month put the brakes on Jetstar Asia's expansion due to growing competition from incumbent airlines and new start ups, and the need to prioritise where it invest its capital. Qantas has a 49 per cent stake in Jetstar Asia.
Click here to view the whole thread at www.sammyboy.com (http://www.singsupplies.com/showthread.php?177541-This-is-how-the-PAP-smokes-and-manipulates-its-citizens&goto=newpost).