ACCC flags all clear for fresh Qantas Emirates tie-up

Qantas and Emirates would be expected to report to the ACCC as part of the conditions for any re-approval of the alliance.

Qantas CEO Alan Joyce speaks during a press conference in the United Arab Emirates in 2013. (EPA/ALI HAIDER)

Qantas Airways and Emirates would be expected to report regularly to the competition watchdog on fares and profitability on the Sydney to Christchurch route as part of the regulator’s conditions to re-approve the joint venture.

The Australian Competition and Consumer Commission today flagged re-authorising the tie-up between Qantas and the Dubai-headquartered Emirates that was first struck in 2013.

Qantas (QAN) said in a statement that the draft decision was “an important step in helping us to deliver a better travel experience and more options between Australia, the UK and Europe for millions of customers”.

However, ACCC commissioner Roger Featherston said the regulator “is concerned that the alliance is likely to significantly impact competition on one route, Sydney to Christchurch”.

“Qantas and Emirates are the two major operators on this route and their only competition is from the Virgin Australia and Air New Zealand alliance,” Mr Featherston said.

Consequently, in its draft decision, the ACCC is proposing to require the carriers to provide regular reports on seats, passengers, fares and the profitability on the route, similar to reporting conditions imposed in 2013. The carriers have about a 68 per cent share of seats flown on this route.

But the draft stops short of an imposing a set level of capacity on the route.

Instead, the ACCC would be able to require the alliance to add extra seats after a review if the reports suggested the number of seats were being limited to push up airfares.

Qantas and Emirates have proposed a shake-up of the trans-Tasman market as part of their agreement to extend their joint venture until 2023.

The Gulf carrier is scaling back its services between Australia and New Zealand, while Qantas is moving to fill some — but not all — of the gap with extra services.

Under the changes, Emirates will next month stop flying from Melbourne and Brisbane to Auckland, but retains its daily flights from Dubai to Christchurch via Sydney on the superjumbo A380. Meanwhile, Qantas will add seven return flights between Melbourne and Auckland and an extra two between Brisbane and Auckland, with some on bigger aircraft.

When the alliance between the carriers was originally struck in 2013, the ACCC had put reporting and capacity conditions on four trans-Tasman routes that included Sydney-Christchurch and three routes to Auckland.

But the regulator said the capacity conditions are no longer required on routes from Sydney to Auckland and Melbourne and Brisbane to Auckland. That’s because of changes including Emirates quitting the Sydney to Auckland route, and its plans to withdraw the Melbourne and Brisbane to Auckland routes. Instead, there is a requirement to report on seats and fares on Auckland-Australia routes in the draft re-authorisation.

Mr Featherston said the regulator considered the alliance “is likely to continue to result in a range of public benefits”.

“Combining the networks of Qantas and Emirates provides customers with access to more flights and destinations under a single airline code and improves connectivity,” he said.

“Loyalty program members will also continue to benefit from the ability to earn and redeem points on both networks and use lounge access and other reciprocal benefits.”

The ACCC will take submissions on its draft decision.