For Qantas and Emirates, how times have changed
Back in 1996, Qantas’s codesharing deal with an upstart Middle Eastern carrier called Emirates came and went with barely a notice.
How times change.
In those days, Qantas was one of the world’s top airlines by any measure. Air Transport World ranked it as the world’s best in 1995, while IATA rated it the world’s 10th largest. Fresh from privatisation, Qantas’s profits reached $246.7 million for the financial year ending that June – about $366 million in today’s dollars.
These days, Qantas is ranked as the world’s 15th best airline – still not bad — but it is long-gone from the ten largest, and its financial results have nose-dived to a $244 million loss last year.
Emirates, founded in 1985, has gone in the opposite direction, and fast. In 1996, when it launched its first services to Australia, its fleet stood at 16 aircraft: 10 A310s and six A300s. Later that year it received its first Boeing 777 – still a stalwart of its fleet – and used the new aircraft on thrice weekly services from Dubai to Melbourne, with Melbourne becoming its fortieth destination. Passengers heading back to Dubai could access connections to 12 cities through the Emirates hub.
Today, Emirates’ fleet stands at 172 aircraft — all widebodies — with 214 more on order. It flies to more than 120 destinations and operates 70 weekly flights to Australia alone – a number soon set to increase to 84. Australian passengers can connect through Dubai to more than 70 destinations.
As Emirates and Qantas tie the knot in an alliance in which Qantas is decidedly the smaller partner, it’s hard to imagine a combination of two airlines that could more starkly illustrate just how much the international aviation industry has changed in the last decade-and-a-half.
The roots of some of those changes are perhaps evident in a few of the other news items dug out from the Australian Aviation archives circa 1996. Emirates was innovating, that year becoming the first carrier to fit all its aircraft with satellite telephones and fax machines, available for use at US$7 per minute. More importantly, its embrace of the 777, becoming one of the first airlines to operate the new long-range jet, showcased the aggressiveness that was to define Emirates in later years.
Qantas was innovating too – though not always as successfully. It tried to lobby the government that year to allow gambling on international flights in a bid to improve its competitiveness. It didn’t buy 777s – then or later – a decision for which it has often been criticised since.
Of course, it’s also fair to point out that Qantas and Emirates weren’t exactly competing on a level playing field, a fact highlighted by the labour agreement Qantas signed with its unions in 1996 giving employees an eight per cent raise. Bigger changes in the global economy, most notably the rise of Asia, were only beginning to be felt.
Not everything has changed, however. In news that sounds a lot more familiar, Qantas announced plans to ramp up domestic capacity by 16.5 per cent beginning in April 1996 as it sought to fend off a challenge from Ansett, which was ramping up capacity by 10 per cent. Analysts warned of an impending airline war that would drive down yields and undermine both airlines’ bottom lines. Ansett, of course, would collapse five years later.
Qantas, which again finds itself facing an airline war with Virgin Australia, survived the 1990s and went on to even higher profits. But times were changing.