Qantas close to Emirates tie up — report

Qantas and Emirates are closing in on a tie-up that would see Qantas fly to Dubai for the first time, according to a report.

Qantas is closing in on a landmark tie-up with Emirates that would see the Flying Kangaroo reroute many of its international flights to Dubai, The Australian Financial Review reported today.

An alliance with Emirates – long a subject of speculation – would free up Qantas to focus on Asia as it seeks to resuscitate its struggling international business, while also giving Qantas passengers access to the world’s largest international network through Emirates’ Dubai hub.

The Financial Review said talks between the two airlines were at a late stage but that no deal had been reached and “multiple sticking points remained.” The tie-up could range from a simple codeshare deal to a revenue sharing alliance with much broader implications for Qantas’ international operations, the newspaper said.

Emirates president Tim Clark last month confirmed that the airline was pursuing a codesharing alliance with Qantas in a bid to strengthen its network in the Asia-Pacific, but dismissed suggestions that Emirates might take a stake in Qantas.

A deal with Emirates would likely see Qantas shift the stop-over point on at least some of its London flights from Singapore to Dubai, and could result in a scaling back or even a severing of Qantas’s codesharing deal with British Airways on the ‘Kangaroo Route’ through Singapore. The deal would also likely result in Qantas cutting services to Frankfurt, its last port on the European continent, with Qantas instead relying on Emirates to ferry passengers onward to Europe. Emirates currently flies to 30 destinations in Europe and 18 in Africa.

An Emirates deal would also represent a major change in Qantas’s international strategy away from one based on the oneworld alliance toward a focus on bilateral relationships, an approach favoured by Virgin Australia. Indeed, a deal would come as Virgin strengthens its alliance with Abu Dhabi based Etihad, a source of much Qantas consternation.

More to the point in the short term, a tie-up with Emirates would give Qantas room to move more aggressively to refocus its international business on routes the Asia-Pacific, where Qantas sees its future. It would also give the airline the option of pushing forward some aircraft retirements as it seeks to rationalise international operations believed to have lost $450 million last year.

Newly appointed Qantas International chief Simon Hickey has warned staff to expect cost cutting. “Every single dollar is sacred,” Mr. Hickey wrote in a memo to Qantas international employees, according to a report today by News Limited. “Please think carefully whenever you’re about to spend and ask yourself: ‘If this was my money, would I spend it?’”