TransTasman routes enter Qantas-Emirates alliance

Six weeks after Australian travellers have had access to bookings on the Qantas-Emirates international aviation alliance, approval has been granted to extend it to transTasman routes covering New Zealand.

Transport Minister Gerry Brownlee’s authorisation opens the way to shared services over the Tasman.

Mr Brownlee, along with the heads of Qantas and Emirates, say the approval will provide New Zealand travellers with stronger links to Australia, Europe, the Middle East, North Africa and the UK, as well as frequent flyer benefits, access to airport lounges and other perks.

Qantas Group chief executive Alan Joyce said the decision will also boost local tourism.

“The partnership also opens the door to increased tourism opportunities for New Zealand, by making it easier for travellers across both Qantas and Emirates’ network connect more seamlessly across the Tasman,” he says.

Mr Brownlee says the authorisation enables Qantas and Emirates to cooperate on passenger and cargo transport operations, and other related services, for an initial period of five years.

He says it will mean Emirates, one of the world largest and fastest expanding airlines, will now be able to offer Queenstown and Wellington as tourism destinations. Emirates already flies daily from Auckland and Christchurch to its Dubai hub through Brisbane, Sydney and Melbourne.

“Transtasman competition will be maintained through existing carriers on the route and the threat of entry by new carriers,” Mr Brownlee says. 

“Conditions imposed by the Australian Competition and Consumer Commission require the airlines to maintain at least their pre-alliance aggregate capacity, subject to a review to consider whether increases in the minimum required capacity are warranted.

“Competition between strong home carriers is important for the Australasian aviation market, and this alliance will ensure competition is retained, while opening the door to additional benefits for New Zealand.”

The official announcement outlines the following benefits and the protection of competition:

BENEFITS
• Passengers will be able to access the global Emirates and Qantas networks with reduced disruption.  The two airlines will also be able to cooperate on the earning and redemption of frequent flyer points, access to airport lounges, and premium services.

• There will be more sustainable competition and cost savings as a result of the alliance, as well as a commitment that the two airline applicants will maintain the number of seats that are operated across the Tasman. This should allow the low fares that passengers enjoy to be maintained.

• Exporters will more easily be able to send freight between the Qantas and Emirates networks.  n particular, this improves access to the extensive network Emirates offers through Europe, the Middle East and Africa.

COMPETITION PROTECTION
The Ministry of Transport’s analysis says this could be managed or mitigated by:

• continued competition from Air New Zealand and Virgin Australia, which operate under an alliance that runs until the end e of the year and is up for renewal;

• the threat of entry from other airlines if prices were to rise;

• a five-year duration that will both allow an assessment of the impact of the alliance and incentivise the applicants to ensure that benefits are delivered; and

• capacity conditions imposed by the ACCC, which means the applicants cannot reduce capacity below current levels. This effectively limits the applicants’ ability to increase prices.