A significant development emerged in the long-standing partnership between Australian flagship airline Qantas and UAE’s Emirates. Last Thursday, the Australian Competition and Consumer Commission (ACCC) shared a draft proposal suggesting the continuation of this cooperation for an additional five years. However, the regulatory body has included an oversight condition for the Sydney to Christchurch route. This draft determination is now with the concerned parties who have until July 12 to submit their responses before the ACCC finalizes its decision.
A Decade-Long History of Collaboration
It’s been over ten years since the Australian competition regulator initially allowed Qantas and Emirates to synchronize their activities across their individual networks. In 2018, this authorization saw a renewal and was set to run out in March this year. Still, an extension was granted, and now the regulator advocates for its continuation.
Through these determinations, corporations receive immunity from prosecution for behavior that may typically raise red flags under Australian competition law. Without this protection from the ACCC, the close collaboration of Qantas and Emirates concerning services, pricing, and capacity could meet opposition due to its inherently anti-competitive proposition.
Balancing Public Benefits with Competition Law
Nonetheless, the ACCC believes that the overarching public benefit from this coordination surmounts the anti-competitive detriment. ACCC Commissioner Anna Brakey explains, “The ACCC considers that the proposed conduct would be likely to result in public benefits, including increased connectivity and convenience and greater loyalty program benefits for consumers. The coordination will give customers greater choice of flight times and flexibility when traveling on routes where the operations of Qantas and Emirates overlap.”
The regulator has expressed one particular worry pertaining to the Sydney-Christchurch route, where the sole competition comes from Air New Zealand. The ACCC believes that this conduct might have a negative public impact by enhancing the airlines’ capability or incentive to independently hike prices or decrease services on the route.
Qantas and Emirates on Their Alliance
In their renewal application, Qantas and Emirates underscored the strategic importance of their partnership. The collaboration enables both airlines to capitalize on each other’s network strengths to “deliver a premium customer service while also growing sustainably as demand returns post-pandemic.” Their networks cover routes connecting Australia to the UK/Europe, New Zealand, Asia, the Middle East, and North Africa.
This collaboration stretches over most parts of the world, barring the Americas. The extent of what the airlines can collaborate on is vast. This conduct includes cost-cutting activities, allowing Qantas and Emirates to determine their prices, the number of aircraft they operate, and their schedules.
The potential renewal of the partnership between Qantas and Emirates underscores the significant strategic advantages airlines can derive from such alliances. Now all eyes are on the ACCC’s final decision, which is expected after July 12.
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