Xenophon attacks ACCC over Qantas deal
The Australian Competition and Consumer Commission granted interim authorisation in January for an alliance between Qantas and Emirates that will allow the airlines to share joint marketing, pricing and co-ordination on some routes, as well as reciprocal frequent flyer benefits and an extensive codesharing arrangement.
The controversial decision came after Qantas warned in September that its international operations were in serious trouble and that its proposed 10-year partnership with Emirates was an "urgent strategic imperative".
But in a stakeholders meeting on Friday, the ACCC admitted it had not asked a forensic accountant to go over Qantas's books to test its claim before allowing the alliance to go ahead. Instead, it said it had relied on its own investigation and on Qantas's submission to the watchdog.
Senator Xenophon said he was concerned about the admission.
"It is absolutely extraordinary ... that there has been no forensic analysis [of Qantas's financial accounts]. That's one admission we got out of the ACCC," he said.
"Qantas's hundreds of companies, hundreds of subsidiaries, and literally the ACCC has not even assessed that, has not forensically looked at these claims of terminal decline.
"Let's put this in context. Back in February 2011 Alan Joyce said that Qantas Group was ticking along nicely, the international division was making really good solid profits, yet less than four months later it was seen to be a complete turn-around. What happened?"
The commission said on Friday that its decision to allow the deal to go through had not been based on Qantas's claim that its business would be in terminal decline if it did not go through.
It also said its decision was not swayed by a consideration of job losses at Qantas, only for the effect on the Australian economy as a whole.
The national secretary of the Transport Workers' Union, Tony Sheldon, said he was concerned the ACCC had not considered the impact the alliance would have on jobs.
"The commission has said today that they refused to actually fully investigate or allocate the required resources into the employment impacts of the decision they made in this interim decision and future decisions they plan to make regarding Emirates and the Qantas tie-up," he said.
"This is quite clearly a fundamental economic question in the national interest."
But a Qantas spokesman said the anti-Emirates attitude of the unions was "completely out of step".
"Three-quarters of Qantas staff support the partnership, as does the federal government, state tourism bodies, our shareholders and our customers," the spokesman said.
"After months of scrutiny, the ACCC's draft determination indicated that it intends to approve the partnership because of the net benefits it will deliver to consumers."
Frequently Asked Questions about this Article…
The interim authorisation lets Qantas and Emirates share joint marketing, coordinate pricing on some routes, offer reciprocal frequent‑flyer benefits and run an extensive codesharing arrangement. The deal is described as a proposed 10‑year partnership aimed at strengthening Qantas's international operations.
The Australian Competition and Consumer Commission (ACCC) admitted it had not commissioned a forensic accountant to examine Qantas's books or its many subsidiaries before granting interim authorisation. Instead, the ACCC says it relied on its own investigation and Qantas's submission.
Senator Nick Xenophon was critical because the ACCC did not carry out forensic analysis of Qantas's financial accounts or its subsidiaries before allowing the alliance to proceed, despite Qantas's claims that its international business faced a 'terminal decline' without the partnership.
The ACCC said its interim decision was not based on Qantas's claim of terminal decline and it did not make its call by weighing potential job losses at Qantas. Instead, the commission said it focused on the likely effect on the Australian economy as a whole and the net benefits to consumers.
The Transport Workers' Union, represented by national secretary Tony Sheldon, said the ACCC did not fully investigate or allocate resources to assess the employment impacts of the alliance. The union argues that job effects are a fundamental economic question that should be examined.
A Qantas spokesman said union opposition to Emirates is out of step and pointed out that three‑quarters of Qantas staff support the partnership. The spokesman also noted backing from the federal government, state tourism bodies, shareholders and customers, and highlighted the ACCC's draft determination which indicated approval because of consumer net benefits.
Interim authorisation means the alliance can proceed while the ACCC continues to consider the arrangement. For everyday investors, that signals regulatory approval in principle for the partnership's commercial features (codesharing, joint marketing, reciprocal loyalty benefits), but the final outcome and longer‑term impacts remain subject to further ACCC review.
Investors should monitor further ACCC determinations, any additional disclosures from Qantas about the partnership's financial impact, union actions or public feedback, and updates on whether the ACCC changes its position after more scrutiny — all of which could influence Qantas's international strategy and investor sentiment.
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