Qantas, Emirates form global partnership

A new 10-year global aviation agreement between Qantas Airways and Emirates is effectively an endorsement of the Gulf-based airlines’ hub-based strategies.

Qantas and Air New Zealand have long depended on one-stop long-haul routes to London through Asia (“Kangaroo route”) or North America. But by using the Gulf as a hub, Emirates and its two rivals, Qatar and Etihad, have undercut that strategy by offering dozens of destinations in Europe without the need to fly into London, whose crowded Heathrow airport is one of the world’s busiest.

Under the agreement announced today, Qantas will move its hub for European flights from Singapore to Dubai and enter an extensive commercial relationship with Emirates.

The two airlines will jointly offer 98 weekly services between Australia and Dubai, including four daily A380 flights.

Qantas will launch daily A380 services from both Sydney and Melbourne to London via Dubai for a combined seven daily A380 flights to London Heathrow with 30 other European destination available through.

Until now, Qantas could only offer its passengers five one-stop options to Europe with its own aircraft or with its codeshare partners in the Oneworld alliance, such as British Airways.

The new deal also means Qantas will severe its long-standing association with BA while remaining with Oneworld. Qantas will also drop its Frankfurt service.

Emirates A380 on Melbourne-Auckland route
Emirates and Qanyas will also coordinate their respective transtasman services with Emirates offering improved schedules for flights to Christchurch and Auckland - including the introduction of Emirates’ daily A380 services on the Melbourne-Auckland route in October.

A fortnight ago, Qantas said it lost $A450 million in its international division and cancelled 35 orders for the new generation Boeing 787 Dreamliner, though 15 have been confirmed for Jetstar, its low cost airline subsidiary.

Qantas aims to turnaround its international arm by forming alliances with other carriers, rejigging aircraft fleet and changing maintenance and operational practices to reduce costs.

A Macquarie Equities analyst has said the deal with Emirates, which is not a member of any global alliance, could add $80-90 million to Qantas’ pre-tax earnings.

The Dubai-based Emirates is already a major force in Australia, with direct flights to all five state capitals. The codeshare will now give it access to 50 destinations in the domestic network flown by Qantas.

Codeshares allow travellers to accumulate frequent flyer points on all flights on either the Qantas or Emirates programmes as well as other perks such use of lounges.

The latest agreement follows a similar arrangement between Abu Dhabi’s Etihad and Virgin Australia, which has Air New Zealand as a codeshare partner. Etihad is also a 10% shareholder in Virgin along with Air New Zealand.