If you can’t buy ’em, form an alliance. The airline industry is littered with such agreements. Emirates and Qantas claim theirs is a new sort of deal, but they would say that. Still, it looks like the right sort of arrangement for Qantas.
The Australian flag-carrier will always suffer from end-destination-it is in a world of hubs. Geography is what it is. But a close partnership with one of the world’s fastest-growing airlines, complete with a handy hub in Dubai, is savvy. Emirates claims this is a groundbreaking deal: structurally it is not really – especially for an airline that has always shunned the big alliances. Emirates will get extra through-traffic from Qantas. Qantas passengers get one-stop access to Emirates’ expanding network while limiting competition with one of the industry’s most-feared fighters. The deal also frees up the Australian airline’s Singapore landing slots, currently devoted to Europe, for Asia-specific flights.
Qantas’s 8.6m frequent fliers can earn-and-burn, as they say, on Emirates. That is great. Probably the best news for passengers is that Qantas will adopt Emirates’ higher baggage allowance (London-Sydney 30kg basic). This is a truly deep alliance. But don’t get giddy, Qantas lost about A$450m in earnings before interest and tax on its international routes last year and this deal is unlikely to get approved before early next year. Sharing in the profits gained from this alliance will help, as will cutting the losses on its European business. Those can be quantified as more details emerge. The key for Qantas is really what it will do with its Asian opportunity. This is a crowded, but growing market. Expansion there is logical enough. Flights to and from Australia are the very definition of long haul. The same could be said of Qantas’s turnround. This deal gives the process a little momentum.