Qantas-Emirates gets final okay

The ACCC has given the final go ahead to the Qantas-Emirates alliance. (Seth Jaworski)

The landmark alliance between Qantas and Emirates has received final approval from Australia’s competition watchdog five days before the tie-up is due to take effect.

In a ruling released today, the Australian Competition and Consumer Commission (ACCC) said it was satisfied the alliance would result in “material, but not substantial” benefits to consumers.

However, as a condition of approval the ACCC ordered the two carriers to maintain at least their current level of four overlapping trans-Tasman routes, addressing a key concerns over the tie-up. Together, Qantas and Emirates account for 65 per cent of passenger capacity between Australia and New Zealand.

The ACCC also stopped short of granting the ten-year approval Qantas and Emirates had sought, instead giving five-year approval and requiring the airline’s to apply for reauthorisation in 2018.

The watchdog said the alliance would likely hurt competition in regions where Qantas and Emirates currently operate competing services. But it ruled that those detriments would be minimal because of competitive constraints, and said the public benefits outweighed the drawbacks.

“The ACCC considers that the alliance is likely to result in public benefits through enhanced products and service offerings by the airlines, and improved operating efficiency,” ACCC chairman Rod Sims said.

“In particular, the alliance is likely to provide Qantas and Emirates customers with increased access to a large number of existing frequencies and destinations under a single airline code, improved connectivity and scheduling, and access to each alliance partner’s frequent flyer programs. The alliance is also likely to provide the airlines with increased flexibility to manage their fleet.”

Qantas CEO Alan Joyce welcomed the decision and said the airlines were ready to commence joint services on March 31.

“Qantas is an Australian icon and the future of its international business is much brighter with this partnership,” he said. “Customers are already responding very strongly to the joint network that Qantas and Emirates have built, and to the frequent flyer benefits that extend across it, with a significant increase in bookings.”

The alliance mainly focuses on code-sharing services between Australia and Dubai, with Qantas re-routing its European services through the Emirates hub. In earlier filings with the ACCC, Qantas had argued that it needed the tie-up to save its money-losing international operations from becoming a “virtual network.”

The approval allows the two carriers to coordinate their passenger and cargo transport operations and related service and to jointly procure goods and services such as aviation fuel. The airlines did not seek authorisation for the supply of catering or aircraft cleaning services.

 

Comments

  1. Lindsay B says

    Ok, everything is approved.. How long do we wait until we determine if the tie up is indeed as wizz bang spectaular as we have been told it will be?

  2. Johnno says

    And I bet the Virgin Tiger deal will get the knock back. ACCC always inconistent. Lets all remember who created jetstar!

  3. Tom says

    @ Lindsay B,

    Probably a few quarters to a year to see the full financial benefits for Qantas flow on through properly.
    That said the network and connectivity benefits will be fully available to see and utilise from the 31st March. A number of analysts are predicting that Qantas International may benefit so much from this partnership that it could be hauled back to profitability before the target set by management. Interesting times ahead!!!

  4. John Harrison says

    So thats it for any Qantas passengers wishing to “go places” on a Qantas plane ex Perth overseas. Oh wow Singapore once a day. Gee the ever shrinking Qantas overseas network. I really have run out words to speak about Qantas anymore.

  5. Tom says

    @John Harrison,

    It’s one of those interesting paradoxes. If enough people flew with Qantas overseas from Perth (i.e. to Hong Kong before the cull) they would maintain or consider increasing service. But so many choose to fly on rival airlines thereby making current Qantas services unviable leading to a reduction in services thereby leading to complaints that Qantas are serving the passengers there.

    Fly with Qantas and you’ll ensure further Qantas service. It’s a message all those who complain need to hear. (Please understand I am not saying this to you personally, rather in general.)

  6. Sam says

    Tom,

    Maybe if Qantas wasn’t so expensive people would. Perhaps if their old school pilots and cabin crew had a look at what the new ones were earning and weren’t so stubborn then maybe they would still be flying.

  7. Tom says

    @Sam,

    INDEED! That is the core issue! It is, unfortunately for this unionist, a case where the power of the unions is far too strong.

  8. John says

    Tom, for someone clearly working for the Qantas PR machine you do a pretty poor job at being discreet about it. Let’s see, so far you’ve covered: Emirates deal good for Qantas, QF staff overpaid, hmmmm what next. Wait a minute, where have I heard all this before? Hmmmm. AA, how about some genuine posts on here not PR rhetoric.

  9. Tom says

    John,

    How about a few less assumptions yeah??

    FYI, I’m a currently unemployed student studying French abroad in France. The only connection I have with Qantas is that I am flying with them (and Emirates via the partnership) on my way home in a few weeks time so naturally I am interested in the particulars of the arrangement. An interest in Australian aviation also helps. I find your rude assumption that I work for the Qantas PR machine and that my posts are not ‘genuine’ highly offensive.

    As for the points I covered: Most analysts with any business sense KNOW and have expressed many times that this deal with Emirates is a GOOD thing for Qantas. I happen to agree with them. Not sure how that makes me part of the ‘Qantas PR machine’. Relative to Virgin Australia and countless other comparable carriers all around the world, Qantas staff ARE considerably overpaid for the services they perform. 10 minutes googling it will find sufficient results to back this up. But, once again I don’t see how this proves that I work for the ‘Qantas PR machine’

    How about next time you actually get some perspective and realise that outside of the ‘Qantas PR machine’ there might actually be some people who support the current Qantas strategy and are actually articulate enough to express their opinions instead of insulting people who don’t agree with yours.

  10. Graham says

    Agree with John Harrison – one QF flight a day to Singapore. Yippee. To ‘enjoy’ the QF-Emirates benefits we now have to fly Emirates ex Perth. Their 380 (ex Sydney/Mel) may have great business class product but not so their services ex Perth. Competitors Singapore, Cathay, Qatar all offer better.