Qantas, Emirates seek ACCC approval of partnership

Qantas and Emirates have announced their intention to form a new global aviation partnership that will give customers a seamless Australian and international network, exclusive frequent flyer benefits and world-class travel experiences.

Qantas will move its hub for European flights to Dubai, including the Kangaroo Route to London, and enter an extensive commercial relationship with Emirates. The 10-year partnership will go beyond codesharing and includes integrated network collaboration with coordinated pricing, sales and scheduling as well as a benefit-sharing model. Subject to ACCC approval, it is anticipated that the partnership will commence in April 2013.

In the joint submission, Qantas and Emirates outline the significant benefits the partnership will provide to Australian consumers, including:

• A significantly expanded global network, improved connectivity and greater choices for Qantas passengers and freight customers to seamlessly travel from Australia and New Zealand to Europe and the Middle East/North Africa Region;

• Improved connectivity for Emirates' passengers and freight customers to the Qantas Group's domestic and other international services;

• Materially and instantly enhancing the benefits for members of both parties' frequent flyer programs, by significantly increasing the earning and redemption opportunities across the combined networks;

• Establishing a long term business model to optimise the operating performance of both Qantas and Emirates including by reducing operating costs; and

• Generating a number of other public benefits including enhancing customer experiences and increasing product innovation, increasing tourism and employment, promoting international trade and enhancing and expediting Emirates' growth in Australia.

The submission also outlines a number of other benefits including:

• The partnership will provoke more competitive fares and product/service offerings from rival carriers;

• The routes are highly competitive and will continue to remain constrained by aggressively expanding competitors;

• The partnership will allow Qantas to retime its existing services into Asia, benefitting customers through better same-day connections to other destinations within Asia;

• Emirates' long-term growth strategy in Australia will be materially enhanced and expedited by the partnership for the benefit of Australian consumers, without Emirates taking any equity stake in Qantas;

• Qantas International, which operates in a highly competitive and dynamic industry without the geographic, regulatory and economic advantages enjoyed by many other international airlines, will benefit from a strategic partnership with Emirates; and

• Qantas and Emirates are willing to offer a formal commitment not to reduce overall trans-Tasman capacity, to address any potential residual concern that the partnership might lead to reduced capacity on the trans-Tasman. Qantas is also considering introducing flights on routes it doesn't currently fly including Adelaide-Auckland and Perth-Auckland.

Together Emirates and Qantas will offer 98 weekly services between Australia and Dubai. The partnership will give Qantas customers one-stop access to more than 70 Emirates destinations in Europe, the Middle East and Africa. For Emirates customers it will open up Qantas' Australian domestic network of more than 50 destinations and 5,000 flights per week. The carriers will also coordinate on their services between Australia and New Zealand and services between Australia and South East Asia.