The consumer watchdog has delivered a fresh hit to Qantas, announcing it will block the airline’s plans for closer ties with a leading Chinese carrier.

The Australian Competition and Consumer Commission cited concerns about high prices on Friday in a ruling that will potentially scuttle a deal between Qantas and China Eastern to continue coordinating operations between Australia and mainland China.

In a draft determination, the ACCC said it proposed to deny extending the deal that allows the two airlines to coordinate passenger and cargo transport operations between the two nations until the end of March 2024.

“An agreement for coordination between two key competitors may breach competition laws,” the watchdog said.

“At this stage we are not satisfied that the likely harm to competition from Qantas and China Eastern’s proposed coordination would be outweighed by any potential benefits,” ACCC commissioner Anna Brakey said.

China Eastern is currently the only airline flying direct between Sydney and Shanghai. Qantas plans to resume flights in late October.

“We are concerned that the authorisation would provide Qantas and China Eastern with the opportunity and incentive to increase prices, compared to what they would charge absent the alliance, by limiting or delaying the introduction of additional capacity on the Sydney-Shanghai route as passenger demand continues to grow,” Ms Brakey said.

The ACCC considers that demand for air travel between Australia and China is likely to keep growing between now and the end of March 2024, as Chinese tour groups return and following Tourism Australia’s recent campaign in China promoting Australia.

“Any additional services on routes other than Sydney- Shanghai could potentially be a public benefit. But we are not satisfied they are likely to eventuate between now and March 2024,” Ms Brakey said.

“A key difference between now and the previous authorisations is we have not been provided with sufficient evidence that the coordination would lead to additional services on other routes between Australia and China.”

Friday’s decision comes just over a fortnight after the watchdog launched Federal Court action against Qantas, accusing it of selling tickets on thousands of “ghost flights”.

It also follows this week’s unanimous High Court ruling that the embattled airline’s mass sacking of workers during the pandemic was illegal.

Minister blocks release of Qatar papers

Deputy Prime Minister Richard Marles says the government has “nothing to hide”, as a cabinet colleague knocked back a Senate request to provide documents about its decision on Qatar Airways’ flights.

A Senate select committee on commonwealth bilateral air service agreements is due to hold hearings next week, asking senior Qantas executives, as well as former CEO Alan Joyce, to appear.

The Senate has also requested the government to release documents relating to its decision to knock back Qatar Airways’ application for a doubling of flights.

“There’s nothing to hide,” Mr Marles told Nine’s Today show on Friday.

“A decision was made by the Transport Minister in the ordinary course of her work, as transport ministers have made over an extensive period of time, around how to apply the national interest in respect of this.

“That’s all that she’s done.”

Transport Minister Catherine King has claimed public interest immunity over documents relating to the Senate order. She said in a letter that air services agreements were “treaty level agreements between countries”.

“There is a public interest in not disclosing such discussions so the government’s negotiations over air services agreements with a range of countries can continue unimpeded.”

The Senate inquiry will also look at federal government decisions on additional air services going back to 2016.

Committee chair and Nationals senator Bridget McKenzie has flagged questions about Qantas’ unlawful outsourcing decisions during the COVID-19 pandemic could also be under the microscope.

“I think the Australian public deserves an answer for a whole raft of questions,” she told 2GB radio on Friday.

She has accused the Albanese government of having a “cosy, personal and political relationship” with Qantas.

Senator McKenzie admitted the former Coalition government had partially knocked back Qatar Airways in the past.

“That’s why this committee is actually going to look at past decisions, what played into those and the most recent decisions so we can make some serious recommendations about opening up one of the most consolidated aviation markets in the world,” she said.

Asked whether former transport minister Michael McCormack should front the inquiry, she said: “The department that worked for the former minister will be called and we’ll be asked those questions.”

The inquiry will examine whether a lack of competition in the aviation sector is pushing up airfare prices and impacting on the tourism and hospitality sectors.

It is due to report by October 9.

– with AAP