Virgin: Qantas-Emirates deal would hurt consumers

written by australianaviation.com.au | October 12, 2012
Virgin says consumers would be better off if the Qantas-Emirates deal gets nixed. (Seth Jaworski)

Virgin Australia has laid out its arguments against the porposed Qantas-Emirates alliance, saying consumers would benefit more if the deal is rejected.

In a submission to the ACCC, Virgin argues that the proposed tie-up is too broad and questions Qantas’s claim that it cannot survive as an international carrier without the deal. Virgin also argues that the alliance would entrench Qantas’s dominant position in the domestic and corporate market to the detriment of Australian passengers.

“The decline in Qantas’s market share has been the result of increased competition from international and domestic carriers that have entered the market over the past 10 years,” Virgin says.

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“This competition and consequent decline in Qantas’ market share has not been to the detriment of Australian consumers. To the contrary, competition has brought significant benefits to Australian consumers, resulting in lower fares, more choice of carrier and service model.”

In its own submissions to the ACCC, Qantas has argued that a rejection of the deal would force it to cut services to Europe and fall back on a “virtual network,” hurting Australian travelers. Qantas lost $450 million on its international services last year.

But Virgin pointed to a recent Qantas decision to extend services to Frankfurt through October next year as a sign that Qantas is overstating the extent to which it would be forced to curtail its international network.

Virgin also argues that the ten-year alliance sought by Qantas and Emirates is too long.

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“Given the number of markets affected by the proposed conduct and the breadth of the proposed conduct, if authorised, the competitive effects and public benefits should be tested over a shorter period,” the airline told the ACCC.

The ACCC is expected to issue a draft ruling on the proposed alliance by the end of the year.

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4 Comments

  • Cri

    says:

    Well….if Qantas extend services to Frankfurt through October next year and Berlin BBA is going to be open in October 2013 – That can suggest that Qantas is going to move his flight from Frankfurt to Berlin.
    Which is reasonable. Emirates fly to Frankfurt but can’t flight to Berlin.

  • Ben

    says:

    Cri, if you are correct then QF management have been lying for a very long time. Threatening to pull out of routes. I think they have overstated the predicament they are in to get what they want. Scaring the federal government and their own employees.
    Alan Joyce needs to go

  • David

    says:

    I can’t see Qantas introducing Berlin as a new route. If it can’t get Frankfurt to work using a 747-400 service, I hardly think Berlin will be a better option, given under the EK alliance they will fly to 4 other German cities.

  • Al

    says:

    Is it a case that Emirates can’t fly to Berlin or that they just don’t currently fly there?

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