Take-off for Qantas-Emirates deal

Australia’s competition regulator has given Qantas Airways and Emirates final approval to form a five-year global alliance, with special conditions for flights across the Tasman Sea.

Under the partnership, Qantas will use Dubai, rather than Singapore, as the stopover point for its flights to London. The first Qantas flight to London via Dubai departs on Sunday.

The Australian Competition and Consumer Commission said the partnership would give the public better products and service offerings.

“The ACCC is satisfied that the alliance is likely to result in material, but not substantial, public benefits,” ACCC chairman Rod Sims said.

The ACCC had already granted interim approval, allowing the Australian and Dubai-based carriers to sell codeshare flights between Australia and Europe, North Africa, the Middle East and Asia.

The final ruling, which lasts for five years, also allows Qantas and Emirates to pair up on flights across the Tasman Sea, subject to conditions.

They must maintain existing capacity on four overlapping routes to New Zealand: Sydney-Auckland, Melbourne-Auckland, Brisbane-Auckland and Sydney-Christchurch.

“On these routes, the ACCC is concerned that Qantas and Emirates will have the ability and incentive to reduce or limit growth in capacity in order to raise airfares,” Sims said.

The requirement to maintain capacity on these four routes – which account for about 65% of all seats between Australia and New Zealand – would be subject to a review to consider whether increases in the minimum capacity were warranted.

“With this condition, the ACCC is satisfied that the relevant net public benefit tests are met,” the ACCC said.

Qantas and Emirates also planned to co-operate on sales, marketing and pricing.

The alliance was a key plank in Qantas chief executive Alan Joyce’s bid to return the Flying Kangaroo’s international operations to profitability.

Qantas signed a 10-year partnership deal with Emirates in September last year, ending a 17-year relationship with British Airways.

Neither Emirates nor Qantas takes equity in the other under the deal.

Mr Joyce said the decision was great news for Australian travellers and local tourism, as well as the airline itself.

“Qantas is an Australian icon and the future of its international business is much brighter with this partnership,” he said.

In welcoming the ACCC decision, Emirates president Tim Clark said: “This is a truly game-changing partnership that brings together two of the world’s best airlines and offers some of the highest quality travel experiences.”

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