Australia’s competition watchdog on Wednesday gave final approval for Qantas and Emirates to launch a “game-changing” global alliance, saying the tie-up will benefit passengers.
The decision by the Australian Competition and Consumer Commission, widely expected after a preliminary green light in December, allows the airlines to combine operations for five years.
Under the alliance, they will coordinate ticket prices and flight schedules and struggling Qantas will shift its hub for European flights from Singapore to Emirates’ Dubai base.
It also means an end to Qantas’s partnership with British Airways on the so-called kangaroo route to London, which has spanned nearly two decades. “The ACCC considers that the alliance is likely to result in public benefits through enhanced products and service offerings by the airlines, and improved operating efficiency,” ACCC chairman Rod Sims said.
The decision comes after a six-month review and just days before the first joint flight from Sydney to London, via Dubai, is scheduled on March 31. However, the regulator said it was concerned that New Zealand was a key market where competition could be eroded.
To deal with this it imposed a condition on flights between Australia and New Zealand, forcing the airlines to maintain existing capacity on four overlapping trans-Tasman routes that were in operation before the alliance.
“With this condition, the ACCC is satisfied that the relevant net public benefit tests are met,” the regulator said.
The alliance is seen as vital to the sustainability of Qantas, which last year posted its first annual deficit since privatisation in 1995, due to tough regional competition and high fuel costs for its international arm.
Qantas chief Alan Joyce called it good news for travellers and Australian tourism.
“Qantas is an Australian icon and the future of its international business is much brighter with this partnership,” he said, with its share price rising 1.74 percent to Aus$1.75 (US$1.84) in afternoon trade.
