ACCC Gives Cautious Approval To Qantas/Emirates Alliance

Qantas announced plans for an alliance with Emirates back in September, but the deal required approval by the Australian Competition and Consumer Commission (ACCC). The ACCC has given provisional approval to the deal, but has halved its length and imposed conditions on the New Zealand routes covered by the airlines.

The ACCC announced today that it was willing to give approval for a five-year alliance, which is half the length the two airlines originally proposed. The main conditions relate to New Zealand flights, as ACCC chairman Rod Sims explained in an announcement:

On the overlapping routes between Australia and New Zealand, the ACCC is concerned that the alliance may have an increased ability and incentive to reduce or limit growth in its capacity in order to raise airfares. Therefore, the ACCC is proposing a condition to restrict the ability of the alliance in this regard.

By the ACCC’s calculations, the two airlines account for 65 per cent of all trans-Tasman traffic. It proposes that the two airlines will be required to maintain a minimum level of service and to grow this by a specified percentage each year. However, the initial “growth factor” figure will be set at zero. Qantas and Emirates must maintain the same number of trans-Tasman seats that were offered by both airlines in 2012, though it can alter the cities included in the pairing.

The decision makes it relatively likely Qantas will meet its proposed April 2013 date for launching the alliance, though further consultation is planned. We’ve examined its potential impact and who has a better A380 service. One area Emirates has a clear advantage: it offers Wi-Fi on some flights, an area Qantas has all but given up on.

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