Emirates-Qantas deal on, but with Tasman conditions

Emirates and Qantas have been allowed by Australian competitor regulators to start preparing for an alliance - but not on the Tasman. Photo / NZ Herald

Emirates and Qantas have won approval for a global alliance with the condition they retain existing services across the Tasman.

The Australian Competition and Consumer Commission says the alliance is likely to result in public benefits through enhanced products and services by the airlines, and improved operating efficiencies.

"The alliance is likely to provide Qantas and Emirates customers with increased access to a large number of existing frequencies and destinations under a single airline code, improved connectivity and scheduling, and access to each alliance partner's frequent flyer programs. The alliance is also likely to provide the airlines with increased flexibility to manage their fleet."

The commission said where there was overlap of services in other parts of the world there were competitive pressure to ensure the impact on fares and freight rates was minimal.

"The one exception is the transtasman where Qantas and Emirates compete on four routes which accounted for around 65 per cent of total passenger capacity between Australia and New Zealand. On these routes, the ACCC is concerned that Qantas and Emirates will have the ability and incentive to reduce or limit growth in capacity in order to raise airfares," said commission chairman Rod Sims.

The commission has imposed a condition which requires the airlines to maintain at least their pre-alliance capacity on the four overlapping transtasman routes, subject to a review to consider whether increases in the minimum required capacity are warranted.

Qantas and Emirates said they welcomed the decision which would provide passengers with a "seamless" international and Australian network, frequent flyer benefits and world-class travel experiences.

Qantas chief executive Alan Joyce said the future of his airline's international business was much brighter with the partnership.

As part of the decision, Qantas and Emirates have committed to maintain at least their current levels of capacity on the four routes that both airlines fly between Australia and New Zealand.

"Subject to approval in New Zealand, the ability to cooperate on these transtasman routes creates the potential for the two airlines to market both Australia and New Zealand to their global networks."

Qantas and Emirates applied to the ACCC for authorisation of their partnership in September last year.