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SIA and Garuda Airlines co-operation: Competition and Consumer Commission of Singapore seeks public feedback
Public feedback sought on potential anti-competitive practices resulting from SIA and Garuda's proposal, which will include expanded code sharing.
SINGAPORE — The Competition and Consumer Commission of Singapore (CCCS) is seeking feedback from the public on the proposed Singapore-Indonesia Commercial Cooperation Framework Agreement between Singapore Airlines (SIA) and Indonesia's flag carrier Garuda Indonesia (GA).
This follows a joint application made by the two airline companies to the CCCS on 19 February 2024 to review the proposed co-operation, the CCCS said in a statement released on Wednesday (13 March).
Specifically, the CCCS said that it is now assessing whether the proposed co-operation would infringe section 34 of the Competition Act 2004, which prohibits agreements or concerted practices by undertakings that prevent, restrict, or distort competition within any market in Singapore. The CCCS assessment would also include Scoot and Citilink Indonesia, the wholly-owned low-cost carrier subsidiaries of SIA and GA, respectively.
Proposed SIA-Garuda commercial co-operation
Under the proposed co-operation, both airlines agreed to co-operate on scheduling, pricing, sales and marketing, and other commercial areas, including expanded code sharing and special prorate arrangements, to bring about a metal-neutral alliance for their services between Singapore and Indonesia.
A metal-neutral alliance refers to a co-operative arrangement between airlines in which partners jointly plan and manage capacity, pricing and inter-airline financial settlement so that all participating airlines share equally in the profits, such that the airlines become effectively indifferent as to which plane or "metal" carries a passenger.
Also read: SIA, Scoot fly a combined 3.3 million passengers in December 2023, up 24.4% than year before
Also read: Singapore Airlines to launch non-stop service to London's Gatwick Airport in June 2024
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Intense competition from low-cost carriers
In their applications, both companies submitted that they overlap on 10 flight routes, including direct and non-direct flights. Both airlines also submitted that the direct overlapping flight routes are the relevant markets that form the basis for the competitive analysis of the proposed co-operation.
Both airlines have claimed that the proposed co-operation is unlikely to result in any adverse effects on competition. This is because both airlines will "continue to face intense competition from low-cost carriers on the direct overlapping routes", and the existing low barriers to entry on these routes would "facilitate entry by potential competitors".
The two airline companies added that the proposed co-operation is expected to result in "significant consumer and economic benefits", as well as efficiencies ranging from enhanced air travel services between Singapore and Indonesia, expansion of airline virtual networks, more competitive fares, and a boost to the aviation and tourism sectors of both countries.
Public feedback on the proposed commercial co-operation is open from 14 March and the closing date for submissions is on 27 March 2024. Members of the public can obtain more information on the public consultation from the CCCS website.
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