SYDNEY, May 6 (Reuters) - Australia's competition regulator...

SYDNEY, May 6 (Reuters) - Australia's competition regulator said on Thursday it proposed to deny authorisation for a joint business agreement between Qantas Airways Ltd (QAN) and Japan Airlines Co Ltd 9201.T (JAL) covering flights between Australia, New Zealand and Japan.

Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims said such a deal between two key competitors, which would allow them to coordinate fares and schedules, could be authorised only if the public benefits from cooperation outweighed the harm to competition.

"At this stage we do not consider that Qantas and Japan Airlines' proposal passes that test," he said, noting that before the pandemic they were the only airlines offering flights between Melbourne and Tokyo.

On the Sydney-Tokyo route, ANA Holdings Inc 9202.T also offers flights. Virgin Australia had been set to fly between Brisbane and Tokyo when the pandemic hit, but it has since gotten rid of widebody planes capable of the flights.

"This proposed coordination would appear to undermine competition significantly by reducing the prospect of a strong return to competition on the Melbourne–Tokyo and Sydney–Tokyo routes when international travel resumes," Sims said.

The ACCC is seeking submissions from interested parties in response to this draft determination by May 27 and will make a final decision after considering those submissions.

Qantas and JAL, which had applied for ACCC authorisation in December, did not respond immediately to requests for comment.

At the time, the airlines said the deal would allow them to better serve customers travelling between Australia, New Zealand and Japan and would support the tourism industry's recovery when regular international travel resumes.