Australia’s competition regulator on Monday denied authorization for Qantas Airways and Japan Airlines to coordinate flights between Australia and Japan under the terms of a joint business agreement.

The Australian Competition and Consumer Commission (ACCC) said that the agreement would likely lead to reduced competition as international travel resumes, to the detriment of passengers traveling between Australia and Japan.

The ACCC said that granting the authorization would not only remove competition between Qantas and Japan Airlines, but it would also make it very difficult for other airlines to operate on routes between Australia and Japan.

Virgin Australia told the ACCC that it would be more difficult to enter the Australia-Japan route if it is required to compete with Qantas and Japan Airlines acting jointly rather than as individual competing airlines.

Qantas and Japan Airlines have expressed their disappointment at the ACCC’s decision to block the airlines’ plans to form a joint business.

The airlines had sought approval from the ACCC in December 2020 to work more closely together to better serve customers traveling between Australia, New Zealand, and Japan and ensure a faster and sustained recovery from COVID.

Qantas and Japan Airlines would continue their existing codeshare and one world partnership, which do not provide the same benefits that would have been possible under a joint business, Qantas said.

International air travel to and from Australia came almost to a standstill after Australia closed its international borders to all but residents and citizens with a few exceptions in mid-March 2020.

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Qantas, Australia’s flagship airline, has outlined a gradual resumption of international flights from December 2021.

The Qantas Group’s plans are linked to the coronavirus vaccine roll-out in Australia and key overseas markets.