Qantas gets approval for Emirates alliance

Australian regulator approves tie-up, which will give Qantas extra international routes

PUBLISHED : Friday, 21 December, 2012, 12:00am
UPDATED : Friday, 21 December, 2012, 3:46am

Qantas Airways, Australia's largest carrier, has won provisional approval from the nation's antitrust regulator to cooperate with Emirates on services as it seeks to turn around unprofitable international operations.

The agreement should be permitted for five years, rather than the 10 sought by the carriers, the Australian Competition & Consumer Commission, or ACCC, said in a statement yesterday. Sydney-based Qantas has previously said the venture will begin in April.

The venture will let Qantas sell tickets to 60 new one-stop destinations in Europe, the Middle East and Africa via Emirates' Dubai hub, and help it overhaul Asian schedules. The Australian carrier sought the tie-up after losing market share on international routes to Middle East and Asian rivals offering a wider range of connections and more convenient flight times.

"This is the right deal for Qantas," Simon Fitzgerald, a Sydney-based analyst at Moelis & Co, said before the announcement. "They can fly to a lot of destinations with this."

Under the planned Qantas-Emirates accord, the two carriers intend to coordinate pricing, sales and scheduling, as well as aligning frequent-flier programmes so passengers can earn points on both carriers' flights.

Emirates will gain access to Qantas' Australia and New Zealand network. Qantas shares rose 1 per cent to A$1.465 at 10.14am in Sydney. The stock has jumped 22 per cent since announcing the agreement with Emirates on September 6, on speculation it will be better able to compete on international routes.

"The ACCC considers that the alliance is likely to result in material, although not substantial, benefits to Australian consumers," the regulator's chairman Rod Sims said.

Qantas, which lost A$450 million (HK$3.67 billion) on international operations in the year ended June, will shift its European hub to Dubai from Singapore under the accord. The carrier is also abandoning a 17-year partnership with British Airways and ending a loss-making Frankfurt route.

The new hub will let Qantas reschedule services through Singapore to be more appealing for corporate travellers, Simon Hickey, head of Qantas' international division, said earlier this month.