SYDNEY: Australia's competition watchdog on Thursday gave its draft approval to a global alliance between struggling carrier Qantas and Dubai-based Emirates, but only for five years initially.
The Australian Competition and Consumer Commission (ACCC) said the benefits, which will see the carriers coordinating ticket prices and flight schedules, would likely outweigh reduced competition on certain routes.
A final decision will be made by March.
"The ACCC considers that the alliance is likely to result in material, although not substantial, benefits to Australian consumers," ACCC chairman Rod Sims said in a statement to the Australian Stock Exchange.
"The main benefit arising from the alliance is an improved product and service offering by the two airlines to their customers.
"This includes increased customer access to each others' flights, destinations and frequent flyer programmes."
Sims added that the alliance would lessen competition on some international routes, but competition from other airlines should mitigate that impact.
However, he said Qantas and Emirates could reduce or limit capacity on routes between Australia and New Zealand under the partnership, which could result in higher airfares.
It was for this reason that the ACCC only gave an initial five-year approval, half the 10 years requested by the airlines. The decision would then be reviewed.
Under the alliance, Qantas will shift its hub for European flights to Dubai from Singapore in a bid to stem losses after this year posting its first annual loss since privatisation in 1995.
The deal goes beyond code sharing to include coordinated pricing, sales and scheduling and a benefit-sharing model, although neither airline will take equity in the other.
For Emirates customers, the alliance will open up Qantas' Australian domestic network of more than 50 destinations and nearly 5,000 flights per week.
- AFP/de
Qantas-Emirates alliance gets conditional approval
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Qantas-Emirates alliance gets conditional approval
