Qantas gets liftoff on Emirates deal
But the regulator has granted final approval for the alliance after deciding that stiff competition from other airlines on routes to Europe will not lead to higher fares or other negative impacts on passengers.
The airlines are now free to launch their alliance as planned on Sunday, which is mostly focused on routes to Europe via Dubai but includes routes to North Africa, Asia and New Zealand.
In granting them approval for five years, the Australian Competition and Consumer Commission has also forced the airlines to keep capacity on four overlapping trans-Tasman routes at their existing levels.
The approval had been widely expected but not the regulator's dismissal of Qantas' claims that without the Emirates alliance its international flying operations were in terminal decline.
The performance of Qantas' international operations has long been a point of contention in the war of words between Qantas boss Alan Joyce and trade unions and the federal independent senator Nick Xenophon.
ACCC chairman Rod Sims said he did not accept the "terminal decline" argument. "They're still going to fly to Asia, and they are still going to fly to America and South America. We never accepted that they were going to get out of international aviation," he said.
Despite rejecting the claim, Mr Sims said he approved the deal because of the "extremely competitive" nature of the international airline industry.
"So if it's extremely competitive we don't see any competitive detriment, therefore the material but not substantial benefits trump the detriments, so we can approve the deal," he said.
But Transport Workers Union boss Tony Sheldon said the ACCC had failed to fully address the negative impact of the deal because it did not take into account the wider impact on jobs, the economy or national security.
The TWU, which represents Qantas ground staff, is considering a legal challenge to the ACCC approval.
Senator Xenophon called on Mr Joyce to come clean about the airline's international division.
Qantas has claimed a higher labour bill puts it at a disadvantage to airlines in the Middle East and Asia. But in its report granting approval, the regulator said it did not accept the extent of the disadvantage.
The watchdog considered confidential board documents and route profitability data, as well as reports provided by Qantas from Boston Consulting and Oxford Economics.
The ACCC accepted Qantas was likely to cut services to Europe with or without the Emirates alliance but said "in all other areas" of its international operations any disadvantages were likely to be offset by its grip on the domestic market and the loyalty of frequent flyers and corporates.
It also did not place any weight on Qantas' claims of "structural disadvantage" due to government ownership and different tax treatment for other international airlines.
The Qantas-Emirates deal
Qantas flights from Melbourne and Sydney to London to go via Dubai.
Qantas to codeshare on Emirates services out of Australia to Europe, the Middle East, Asia and North Africa.
No equity investment by either airline.
Qantas and Emirates to co-ordinate trans- Tasman services (subject to approval from NZ authorities).
Qantas frequent flyer points earned on Emirates flights.
Alliance approved for five years.
Frequently Asked Questions about this Article…
The Australian Competition and Consumer Commission (ACCC) granted final approval for the Qantas‑Emirates alliance for five years, saying the intensely competitive international airline market meant the deal was unlikely to cause higher fares or other consumer harm.
The ACCC approved the alliance for a five‑year period.
The ACCC concluded that strong competition on routes to Europe and elsewhere meant the alliance was unlikely to lead to higher fares or other negative impacts on passengers.
The alliance focuses on routes to Europe via Dubai and covers routes to North Africa, Asia and New Zealand. Qantas will route Melbourne and Sydney services to London via Dubai, codeshare on Emirates services out of Australia, allow Qantas Frequent Flyer points on Emirates flights, and coordinate trans‑Tasman services (subject to New Zealand approval). There is no equity investment by either airline.
No. ACCC chair Rod Sims rejected the 'terminal decline' argument, noting Qantas would continue flying to Asia, the Americas and South America; the ACCC did accept Qantas was likely to cut some Europe services with or without the alliance.
Yes. Among other things the ACCC required the airlines to keep capacity on four overlapping trans‑Tasman routes at existing levels, and the trans‑Tasman coordination is subject to approval from New Zealand authorities.
The Transport Workers Union (TWU) warned the ACCC had not fully addressed potential negative impacts on jobs, the economy and national security and is considering a legal challenge; independent senator Nick Xenophon also pressed Qantas management for transparency about its international division.
The ACCC reviewed confidential board documents and reports from Boston Consulting and Oxford Economics but did not accept the full extent of Qantas' claimed labour‑cost disadvantage and did not place weight on claims of 'structural disadvantage' due to government ownership or different tax treatment.
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