Qantas signs historic tie-up with Emirates

written by australianaviation.com.au | September 6, 2012
Qantas will reroute its European flights through Dubai beginning in April.

Qantas will shift its European hub to Dubai as it enters a 10-year alliance with Emirates that CEO Alan Joyce called the most significant in Qantas history.

The long-rumoured deal, which will take effect in April, moves “past the traditional alliance model to a new level” and will include reciprocal frequent flier benefits and coordinated pricing and scheduling, Mr Joyce said in a Sydney press conference with Emirates boss Tim Clark this morning.

The result of months of negotiations, the deal comes at a critical moment for Qantas, which lost $244 million last year driven by a $450 million loss from its international operations.

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“This is the biggest arrangement Qantas has ever entered into with another airline,” Mr Joyce said. “This agreement represents a step-change for the aviation industry.”

Neither airline will take an equity share in the other as part of the deal, which Mr Joyce pointedly described as a “partnership of peers, based on shared standards and aspirations.”

But the details of the alliance also make clear which partner is the larger. Together, the two airlines will operate 98 weekly A380 and 777 flights between Australia and Dubai. Since Emirates currently operates 70 weekly flights to Australia with plans to increase that number to 84, it appears Qantas’s lone contribution will be single daily A380 flights from Sydney and Melbourne to London via Dubai.

Tim Clark and Alan Joyce today.

The alliance will spell the end of the ‘Kangaroo Route’ to London via Singapore and Qantas’s 17-year revenue-sharing alliance with British Airways, which will be terminated on March 31 next year. Qantas will also withdraw from its loss-making Singapore-Frankfurt route and end its codesharing agreements with Cathay Pacific and Air France, though Mr Joyce said the airline would remain a member of the Oneworld alliance.

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On the whole, however, the deal offers Qantas a number of key benefits. It allows the airline to minimise its direct exposure to a European market where it has proven unable to compete, while giving its passengers expanded access to Europe through Emirates’ network of 33 European destinations. Frequent flier reciprocity, including access to tier status benefits such as lounge access and priority check-in, also represents an important aspect for Qantas as it seeks to hold on to its most coveted customers while scaling back its own international operations.

The deal also offers the cache of closely associating the Qantas brand with an airline widely recognised as one of the world’s best, operating the world’s largest international network. Qantas will become the only airline besides Emirates flying out of Dubai Airport’s Terminal 3, which includes a new purpose-built A380 terminal.  Qantas passengers will have access to more than 70 Emirates destinations in Europe, the Middle East and Africa.

Emirates, meanwhile, will gain access to Qantas’s domestic network of more than 50 destinations. The two carriers will also coordinate their services between Australia and New Zealand and Southeast Asia.

“The time was right to develop a long-term partnership with Qantas, the iconic Australian airline,” Mr Clark said. “Since our first flights began in 1996, Australia has long been a popular destination for Emirates leisure and business travellers, making it one of the top three destinations in our network.”

By shifting Qantas’s hub for European flights from Singapore to Dubai, the alliance will also allow Qantas to restructure its services to Asia. Mr Joyce said the airline will launch more dedicated capacity to Singapore and will re-time its flights to Singapore and Hong Kong to allow more ‘same-day’ connections. Qantas currently operates overnight flights to Singapore designed to facilitate onward connections to Europe.

“Qantas’s Asian services will no longer be a subsidiary of the ‘Kangaroo Route’,” Mr Joyce said. “Instead they will be dedicated to connecting Australians with our region, and Asian visitors to Australia.”

The alliance is pending regulatory approval, with the airlines planning to submit an application for interim authorisation to the ACCC in order to begin commercial planning.


 

14 Comments

  • pez

    says:

    Wow. Bye Bye BA and Singapore.

  • greg

    says:

    BA and LHR hub: good riddance.
    Singapore for Dubai: a pity

  • Matt

    says:

    Its a shame that Qantas isn’t going to Signapore any more,
    Although it would be nice seeing Qantas aircraft in Dubai.
    It will be completely different and will boost Qantas’ International Operations…. hopefully!

    • australianaviation.com.au

      says:

      QF will continue flying to Singapore, it just won’t fly on from there to London

  • Ben

    says:

    Not a big fan of QF. Bout Alan Joyce has done a good job with the changes he has made

  • Murray

    says:

    It really all depends on whether Qantas really makes the schedules to Hong Kong and Singapore work. Qantas needs more daily flights and a lot better connection options than currently offered. Hong Kong – 10 flights a week – waste of time – they need 21 flights a week to convince me that they have the connection options I need.

  • schmilsa

    says:

    Seems like Borgetti had it right after all, Qantas just copying Virgin….again!

  • Aubrey

    says:

    Hopefully Emirate will retain their 30kg Economy baggage allowance and free online check-in and seat allocation and not drop down to Qantas’s level for these services.

  • Hutch

    says:

    @Aubrey
    From what I read, the partners agreed to maintain the higher level of service where they currently differ. Therefore I understand that the 30kg will be maintained and QF will also raise their’s to 23kg.

  • Peter Brown

    says:

    From a North American perspective it appears QANTAS is becoming a Pacific carrier only. One service a day to London via QANTAS doesn’t quite cut it. Crawling into bed with a carrier with great service and no public audited financial statements is probably the best way for QANTAS to go. Thank the Australian government and freedom of the skies advocates for this. Maybe get rid of QANTAS completely and call the Australian airline,
    JETSTARS and and all the other JETSTARS

  • Zac

    says:

    Peter. Get your facts straight. They are not flying only one service a day to London. Get onboard or otherwise watch Qantas die a fast death

  • Ty

    says:

    This is the most intelligent move Alan Joyce has made yet. Dumping BA for EK is a no brainer.

    In saying that, Qantas is still playing catch up (or copying as it does so well) Virgin. Emirates decision to form such a comprehensive alliance is clearly a response to the Etihad/Virgin/ Air NZ tie-up, which currently offers a much superior Australasian network. It will also allow EK to fill Qantas jets with its passengers on routes where its facing major capacity restraints into Europe.

    The real question is can QF standards rise to those of its new partner? I see the first and business chauffeurs are going to be introduced (no doubt a condition of EK) but will Qantas upgrade is IFE system to ICE or something similar? I would be very angry if I were to book an Emirates ticket only to get bumped on to a QF flight, purely because of the current differences in inflight product and delivery. Emirates will be gambling with its passengers in this respect.

    Now that the battle lines are drawn, it will be interesting to see how Virgin/ Air New Zealand/ Etihad and Singapore airlines respond.

  • Nth American Observer

    says:

    A question one must make is who is actually steering Qantas. If one plots a road map from the events over the last two years, you can quickly see there is no long term direction. Countless U-turns on failed ventures and the quiet step down of Jetstar CEO, Bruce Buchanan shortly before the major loss announcement.

    Further this latest move in the newly formed alliance was brought about by Emirates who is competing with the smaller yet potent players in the region, Etihad and Qatar. Given Emirates long term strategy has been one of constant and steady growth, it is hard to envisage that this tie-up will lead to any growth in Qantas International. Qantas will likely concede Europe to Emirates and become a feeder for a new virtual network.

    The quality of service by Qantas has diminished to a state that it is only competitive on routes to North America, South America and Africa. If Qantas wants to establish itself in Asia, it can only do so in the cheap and not so cheerful form of Jetstar competing with Air Asia, Tiger et al.

    Virgin Australia is clearly showing itself as the future in the region re-aligning their standards towards that of its partners in terms level of service and young fleet age. The new A330’s are consistent with the offerings with Singapore airlines and presents a package that caters to the level expected by travelers in the growth region of Asia.

    Let’s keep an eye out of on Virgin’s initiatives and Qantas will surely follow the leader.

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