Qantas chief financial officer Gareth Evans says the airline’s global alliance with Emirates is delivering on all fronts. The tie-up with the Dubai-headquartered Emirates has solved Qantas’s European network problems, as well as delivered an economic and financial benefit since it began in April 2013, Evans said on Thursday.
“From a customer point of view it is working fantastically,” Evans told the CAPA Australia Pacific aviation summit.
“From an economics perspective it is absolutely doing what we would hoped it would have done and what Emirates would have hoped it would have done.”
Evans noted the benefits of the tie-up with Emirates have been achieved amid an extremely competitive and difficult Australia to Europe market, with lots of different carriers and plenty of seats.
“Both of us would wholeheartedly agree that we would be a damn sight worse off without the relationship than we are with the relationship,” he said.
While there had been some tweaks on pricing, certain behaviour on joint selling and on product alignment, Evans said that was all expected as the partnership evolved.
“That is absolutely natural,” Evans said.
“We will continue to tweak and adjust and move things.”
In addition to Emirates, Qantas has also partnerships with the likes of American Airlines and LAN Chile for the Americas, alongside tie-ups with China Eastern and China Southern for the emerging Chinese market.
Some, if not all have been mooted as potential equity investors in Qantas, which recently had some restrictions on its share register relaxed after the federal parliament removed some provisions of the Qantas Sale Act. Rules preventing any one foreign airline owning more than 25 per cent of Qantas, as well as a 35 per cent limit on total foreign ownership by airlines have been struck out of the act, leaving the way open for an overseas airline to take up 49 per cent ownership of the Flying Kangaroo.
Evans said it was too early to know what impact the relaxation of those rules would have given the amendments passed parliament only a few weeks ago.
However, history has shown Australia was a very important global aviation market, given the significant amounts of capacity foreign carriers had poured into the region, he said. For example, Cathay Pacific had more seats to Australia than all of Europe, while Australia was the number one or two market in terms of seats for Emirates, according to figures from CAPA executive chairman Peter Harbison.
“That importance makes Qantas a very important global player and I think it is much too early to start to guess who might and who might not be interested in partnerships,” Evans said.
Evans said the rise of Asia, which was forecast to represent one-third of all global air traffic in the period ahead, made a likely source for an airline partner.
But it was too early to say where any partner would eventually come from.
Qantas has been a strong advocate for totally scrapping the act and Evans described this latest change as a big step in the right direction.
“Consolidation is the way of the future for the aviation industry,” Evans said.
“At the same time it never happens quickly.”
Qantas is due to release its full year financial results on August 28. Market consensus was for a reported loss of about $700 million for the 12 months to June 30 2014.
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