The federal government has thrown its support behind Qantas’s proposed alliance with Emirates, saying the tie-up would benefit consumers and bolster competition.
The backing by the Department of Infrastructure and Trade came after Qantas withdrew its request to the ACCC for interim approval of the alliance, which had drawn objections from rival Virgin Australia. Qantas said it would be able to begin planning for the alliance without the interim approval and would instead focus on making its case for final approval. The ACCC is expected to issue a draft ruling by the end of the year.
Qantas last week began selling flights from April through Dubai to London, a keystone of the proposed tie-up.
In its submission to the ACCC, the Transport Department noted that more than 30 airlines fly between Australia and Europe, with competition growing from Chinese carriers in particular.
“Australia is a key market for a range of international airlines and they are unlikely to cede ground to Qantas and Emirates,” the department said, adding that the tie-up would “broaden Qantas’s international network at minimal capital cost” and “enhance consumer choice.”
Qantas has argued that without the tie-up it will be forced to cut European routes and rely on a “virtual network” at a detriment to Australian travelers. But Virgin Australia, which maintains its own code sharing alliance with Etihad, claims the Qantas-Emirates deal would put its rival in a dominant position in the Australian market, undermining competition.
Air New Zealand, meanwhile, has raised its own concerns about Qantas-Emirates cooperation on trans-Tasman routes, arguing that the Tasman portion of the proposed alliance should be considered separately from the long haul arrangement.