ACCC approves Qantas/Emirates alliance; rejects Qantas “decline” claims

ABOVE: A Qantas A330-300 operating the soon-to-be decreased international services, with an Emirates Boeing 777-200LR taxying out in the background. Photo © David Eyre
ABOVE: A Qantas A330-300 operating the soon-to-be decreased international services, with an Emirates Boeing 777-200LR taxying out in the background.
Photo © David Eyre

27 March 2013 © David Eyre

The Australian Competition and Consumer Commission (ACCC) gave final approval on 27 March 2013 for Qantas and Emirates to proceed with their proposed alliance over the next five years, subject to certain conditions.

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

However, the ACCC also said it “has rejected Qantas’ claims that in the future without the proposed conduct, it will cease all international services and operate a virtual network in the medium to long term.” The regulator considered Qantas-supplied data and reports, and said that with or without the Emirates alliance, Qantas would reduce services to Europe. It also rejected claims that Qantas’ services to Asia were in “terminal decline”.

Whilst agreeing with Qantas that airlines in the Middle East and Asia have some advantage through lower labour costs, the ACCC said that the labour cost disadvantage is not as significant as Qantas described.

The ACCC also dismissed Qantas’ claims of other international airlines having advantage through government ownership and better taxation rules, and said that Qantas’ international had a “substantial domestic network”, which gave it a “significant advantage over foreign carriers”.

The review process by the ACCC lasted for six months, including a comprehensive analysis of the advantages and disadvantages, and several rounds of public submissions.

Qantas Group CEO Alan Joyce said that “Qantas is an Australian icon and the future of its international business is much brighter with this partnership,” and that “Customers are already responding very strongly to the joint network that Qantas and Emirates have built, and to the frequent flyer benefits that extend across it, with a significant increase in bookings.”

President of Emirates 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. Dubai is a leading global hub and through it, our two airlines will connect Australia to Europe, the UK and Northern Africa more smoothly than ever before.”

 

David Eyre

President, Aviation Association of WA Inc

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