Jurisdiction - Singapore
Singapore – Airline Industry Market Study.

20 August, 2014


In the first quarter of 2014, the Competition Commission of Singapore (“CCS”) released a summary of its findings from an airline industry market study. CCS first commissioned the study in 2012 to examine, whether certain joint ventures (“JVs”) between airlines operating through Singapore, which had been previously notified and cleared by CCS, have resulted in net economic benefits.

To date, CCS has granted a positive decision to 10 airline cooperation arrangements that have been notified to CCS for a decision on whether the arrangements infringe section 34 of the Competition Act (Cap. 50B) by having as their object or effect the prevention, restriction or distortion of competition within Singapore (“Section 34 Prohibition”). Two of these arrangements, between Japan Airlines and American Airlines (“JAL/AA JV”), and between All Nippon Airways, Continental and United Airlines (“ANA/CO/UA JV”), were scrutinised in detail in the study.

In its decisions approving the JAL/AA JV and the ANA/CO/UA JV, CCS had previously determined that both JVs had, by their very nature, the object of appreciably preventing, restricting or distorting competition in the relevant markets. However, CCS was also satisfied that both JVs led to net economic benefits and were therefore excluded from the Section 34 Prohibition. Specifically, CCS stated that the JAL/AA JV “could potentially lead to optimized scheduling options for customers, reduction in fares, and increases in capacity”, while the ANA/CO/UA JV “[o]n balance…will, in general, improve the production and distribution of air passenger transport in Singapore through the efficiencies the Parties submit” (which included lower fares and increase in schedule choices).

In this study, a cost-benefit analysis (“CBA”) was adopted to estimate the net economic benefit that actually accrued from the JVs, based on four to six quarters of post-JV data. In the course of the study, CCS advised that a total welfare approach to the CBA should be adopted – welfare gains accruing to other parties apart from Singaporeans (eg increased revenue collected by airports, benefits to businesses from increased trade and business travel), should also be considered as part of the assessment of welfare gains.

In relation to the JAL/AA JV, the study found a 14% increase in passenger numbers in the market overall. While there was no change in individual fare on JAL/AA routes post-JV, the average JAL/AA fare on a JV route decreased because of the increase in passenger numbers coming largely from passengers travelling in cheaper fare classes or on cheaper routes. Further, while improvements in flight frequency and capacity was observed, the study determined that, on balance, these effects should be attributed to other factors (eg the opening of Tokyo Haneda airport to new international flights) and not from the JAL/AA JV.

In relation to the ANA/CO/UA JV, the study found a 5% increase in passenger numbers in the market overall. It also found an increase in individual business class fares as well as an increase in average fares because more passengers started to fly business class. There was no evidence of other cost saving or route changing benefits that were attributable to the ANA/CO/UA JV.

On the whole, the study concluded that whilst the JVs appear to have delivered net economic benefits (in the form of increased passenger numbers), the benefits were not as large as those found in the literature for other markets, which generally reflected a post-JV fare reduction of 13%-25% and an increase in passenger numbers of 52%-88%.

However, the study acknowledged that it may be premature to draw firm conclusions about the lifetime impact of the two case study JVs, given only four to six quarters of post-JV data was available for study.

CCS is currently assessing one airline notification relating to a proposed cooperation arrangement between Etihad Airways PJSC and Jet Airways (India) Limited.


Drew & Napier


For further information, please contact:


Cavinder Bull, Director, Drew & Napier

[email protected]


Chong Kin Lim, Director, Drew & Napier

[email protected]


Scott Clements, Drew & Napier

[email protected]


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