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Qantas, Emirates tie-up takes off

QANTAS-AIRWAYSSYDNEY, Jan 17 – Australia’s competition watchdog on Thursday gave Qantas and Emirates Airlines permission to launch their global alliance although final approval is still pending.

The Australian Competition and Consumer Commission, which gave the carriers preliminary approval in December to combine operations for an initial five years, said that practical sales, marketing and other steps could now start.

“The ACCC is allowing Qantas and Emirates to start implementing their alliance because of the long lead time required to market and sell tickets before the commencement of long-haul services,” said ACCC chairman Rod Sims.

“In making its decision, the ACCC has accepted written assurances from the parties that should the ACCC ultimately decide not to allow the alliance to go ahead, the airlines will accommodate consumers’ bookings.”

The regulator said it anticipated making a final decision in March.

Under the proposal, which will be fully implemented from April, the airlines will coordinate ticket prices and flight schedules and Qantas will shift its hub for European flights to Dubai from Singapore.

It also means an end to Qantas’s partnership with British Airways on the so-called kangaroo route to London, which has spanned nearly two decades.

The tie-up is seen as vital to the sustainability of Qantas, which last year posted its first annual deficit since privatisation in 1995 due to tough regional competition and high fuel costs for its international arm.

Sims said the ACCC had determined in December that “the public benefits resulting from the alliance are likely to outweigh the public detriment … where Qantas and Emirates offer overlapping services”.

But he said New Zealand had been identified as a key market where competition could be eroded by the Qantas-Emirates deal and the ACCC had therefore exempted it from the new permissions for now.

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“The ACCC is granting interim authorisation on the condition that the applicants do not engage in the conduct for which authorisation is sought in relation to services between Australia and New Zealand,” Sims said.

He added that the regulator “may review its decision on interim authorisation at any time and it should not be taken to be indicative of whether or not final authorisation will be granted”.

Qantas chief Alan Joyce said the decision meant pricing, capacity and scheduling could now be coordinated with Emirates and one-stop trips could be booked across their combined networks, boosting tourism.

Once final approval is granted, Qantas will fly daily Airbus A380 services from Sydney and Melbourne to London via Dubai, meaning that the two airlines will operate 98 weekly services between Australia and the Emirates Gulf hub.

For Emirates customers, the alliance opens up Qantas’s Australian domestic network of more than 50 destinations and nearly 5,000 flights per week.

Dubai Airports has earmarked $7.8 billion to further expand the capacity of the international travel hub and expects to handle 75 million passengers by 2015 and 98 million by 2020. Some 57 million passengers were expected to use Dubai International in 2012.

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