A last minute effort by independent SA Senator, Nick Xenophon, to broaden the ACCC’s consideration of its provisional approval of the proposed Qantas-Emirates ‘partnership’ has been simultaneously suggested and rejected in today’s AFR.
In an opinion piece, Xenophon suggests that a judicial review of the ACCC’s decision making could be sought if it doesn’t drill deeper into the Qantas group business to resolve inconsistencies in its argument that its full service international is making unsustainable losses.
However in a response to the Xenophon article ACCC chairman Rod Sims rejects this call.
This leaves the ball at Xenophon’s feet, since if an application for a judicial review is granted the final confirmation of the proposed Qantas-Emirates deal by its intended start date of 1 April will be under even more pressure than it is now, or even struck out.
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In broad terms, the ACCC has found while that the proposed benefits of the Qantas-Emirates deal to the parties and their customers were limited in extent, any detrimental impact on overall competition would be compensated for by the strong competitive nature of the international air travel sector and the responses to the deal by other airlines.
The deal involves Qantas giving its direct Australia-Europe business via the Emirates hub at Dubai to Emirates for flights originating in Brisbane, Adelaide and Perth. It makes Qantas a Sydney and Melbourne daily operator of A380s in each case to London, as well as making Emirates an additional source of lift for Qantas customers to SE Asia in so far as it operates to or has rights to Bangkok, Kuala Lumpur and Singapore from various Australian cities.
However the ACCC proposes to prevent Emirates and Qantas from rationalising, that is, reducing their respective current capacity on the trans Tasman routes to Auckland and Christchurch.
Qantas in turn, through code shares on Emirates airliners, will be in a position to offer its customers much faster one stop services between more than 30 cities in the UK, Europe, central Asia, the Middle East and much of Africa than they can currently access through its flights to London and Frankfurt, with the latter shutting down at the end of October.
The reality is that many Australian and overseas originating travels are already using Emirates services in this manner rather than making less convenient connections to Qantas flights, or indeed the services of other foreign airlines that compete with Emirates to offer similarly faster and more comprehensive connections.
Qantas will in fact be offering travellers an opportunity to fly on Emirates rather than Qantas for a range of services on which the market already flies Emirates or Etihad or Singapore Airlines and so forth, in their own right.
These non-Qantas but Qantas code shared flights will however allow Qantas frequent flyers to earn points on those services, just as they can continue to do on British Airways or Cathay Pacific services from Australian cities to Europe via Singapore or Hong Kong.
However illustrating the zero-sum aspects of the proposed deal for travellers, those who already belong to the Emirates FFP scheme will be able to transfer status and burn points on Qantas flights without actually paying for a single flight on any Qantas jet ever, subject to the ‘millions’ of words of invisibly fine print in the terms and conditions both airlines can change at whim whenever they like.
There are clearly many aspects of the Qantas-Emirates deal that will continue to generate friction among those upset at the decline of the major Australian international flag carrier, including the pilots and engineers and cabin crew who see themselves as being disenfranchised in precisely the manner that the Qantas Sale Act 1992 was intended to prevent.
(That act was not, with hindsight, future proofed, and its authors had no inkling of the low cost airline revolution nor the capacity of Qantas to transfer assets as it sees fit to entities that may be located offshore under the Jetstar brand.)
The Qantas-Emirates proposed partnership has also infuriated the dissident shareholder group in Qantas which includes former CEO Geoff Dixon, former CFO Peter Gregg and vulture capitalist Mark Carnegie, and ad man John Singleton who through the last named, have articulated an ambition to plunder from Qantas what its current management seems determined to give away to Emirates.
None of this is likely to end well for the future of Qantas, nor the minority of international travelers (combining Australian and other nationality travellers) who continue to use its services between Australia and the rest of the world.