The Comesa Competition Commission (CCC) has granted conditional approval for a joint business agreement between British Airways (BA), Qatar Airways and the Spanish carrier Iberia, within the common market, following concerns that it would undermine competitiveness on the busy Nairobi-London route.
The agreement, which was inked in August 2023, allows the airlines to cooperate on scheduling of flights, tickets sales, fare pricing and inventory management, frequent flyer programme coordination, and joint handling and procurement of services.
However, the CCC has expressed concerns about the agreement’s potential impact on price competition on the London–Nairobi route, where Qatar Airways and BA are key carriers with different price points.
Speaking in Nairobi on Friday, the Comesa Competition Commission chief executive officer Willard Mwemba said that the agreement had been deemed anti-competitive, because the airlines were coordinating their commercial behaviour.
The situation was further complicated by the fact that Kenya Airways — another key carrier on the Nairobi-London route — had its own separate agreements with BA and Qatar Airways, reducing competition on the route even further.
Nevertheless, after deliberations, the CCC has now resolved to issue the conditional approval to the deal, on the condition that the airlines pass on the benefits of the agreement to passengers through cheaper fares, increased numbers of flights, and access to lounges.
“What that did was to virtually eliminate all competition between BA, Kenya Airways, and Qatar Airways on the London route, leaving consumers exposed. So, we rejected this agreement in our preliminary decision issued to the parties, because we thought it was anti-competitive,” said Dr Mwemba.
“However, in their reaction to the preliminary decision, the airlines gave a number of justifications, among them a planned increase in weekly flights to London to 28 as a result of the arrangement.”
The airlines also argued that their agreement would eliminate double margins on tickets when each airline sold tickets separately, resulting in lower fares for passengers.
They also said that the resulting economies of scale, scope and density would enable each airline an opportunity to operate where it could not previously.
Furthermore, they stated that they had provided KQ with a landing slot at London Gatwick Airport, despite the airline having previously expressed concerns about the BA-Qatar agreement on the London route.
The CCC, however, said that this did not necessarily factor into its decision.
Direct flight air fares
In addition to Kenya, the agreement also affects the respective airlines’ activities in Ethiopia, Djibouti, Mauritius, the Democratic Republic of Congo, Seychelles, Somalia, Sudan, Uganda, Zambia and Zimbabwe.
The Nairobi-London route, however, stood out due to the differences in pricing options and cross-partnerships within the group of airlines, including with Kenya’s national carrier, KQ.
The commission said it found that BA’s direct flight to London from Nairobi was cheaper than the Qatar Airways option via Doha. If the two airlines stopped competing based on the agreement, there was a risk that the direct flight would end up being as expensive as the Doha option, to the disadvantage of passengers.
Then there was also the issue of KQ, which flew directly to London but had a separate agreement with BA on the London route. This made it unlikely that KQ would put competitive pressure on the BA, Qatar and Iberia arrangement.
If the airlines fail to pass on the benefits to passengers as agreed, they risk having the arrangement revoked, given that the commission has only granted its approval for five years. Other jurisdictions, such as Australia, have approved the partnership indefinitely.
