Travel agents criticise push to extend Qantas-Emirates tie-up

Travel agents have raised concerns with the competition watchdog about an extension to the Qantas-Emirates partnership, saying it will do nothing to reduce exorbitant airfares.

Qantas and Emirates are seeking a five-year extension of their 10-year partnership, which is due to expire in March. Picture: NCA NewsWire/Andrew Henshaw

Travel agents have raised concerns with the competition watchdog about an extension to the Qantas-Emirates partnership, saying it will do nothing to reduce exorbitant airfares.

The agreement between the two airlines was first struck in 2013, allowing them to co-ordinate pricing, schedules, sales and tourism marketing on approved routes.

For passengers, the partnership provided the opportunity to earn and redeem frequent-flyer points on routes to which Qantas does not fly, as well as access to Emirates’ lounges.

But in a submission to the Australian Competition & Consumer Commission, the Australian Federation of Travel Agents said the partnership meant Qantas and Emirates held more than 50 per cent of the market on routes to Auckland and the UK.

That meant it was harder for prospective competitors to gain airport slots, ensuring airfares remained high, the submission said.

Travel agents were also concerned that the airlines were ­withholding some types of fares from competitive distribution, to drive more traffic to their own websites.

“This activity is enabling airlines to become the sole price makers and therefore increase the margins on their cheapest products with no pressure from the market,” the AFTA said.

“Not providing access to all airline availability to travel businesses and reserving sales of the cheapest cohort of airfares to its direct channel with consumers prevents any competition from travel agents on the efficient distribution of these highly sought-after tickets.”

There was no mention of the partnership’s effect on pricing in Qantas’s submission to the ACCC, which focused on “public benefits” such as access to a greater travel network and the ability for frequent-flyer redemptions.

Qantas said that, in 2018-19, 118,000 passenger segments were redeemed and travelled on Emirates aircraft, up from 61,000 in 2013-14.

“More than 60 per cent of redemptions were for travel in premium cabins (in 2018-19), up from 55 per cent in 2017-18,” the submission said.

In the event the partnership extension was denied, Qantas said both airlines would be at a commercial disadvantage.

“(Without the partnership extension, Qantas and Emirates will) lack any ability or incentive to share broad access to each other’s networks and inventory resulting in fewer booking options for consumers,” Qantas’s submission said.

Qantas was also seeking a 12-month extension of its partnership with China Eastern Airlines with a view to a longer arrangement from March 2024 onwards.

AFTA raised similar concerns in relation to that proposal, saying the tie-up did not provide any incentive for “much needed increases in capacity”.

The travel agents’ submission argued that without the partnership, Qantas would be more likely to operate its own services into China, which would increase flight options for travellers.

“It is notable that key competitors without equivalent authorisations have demonstrated a more discernible commitment to increase capacity, with Qatar Airways and Singapore Airlines’ capacity already back at 100 per cent and 82 per cent of pre-pandemic levels, respectively,” said the AFTA submission.

Qantas international capacity was at about 70 per cent of pre-Covid levels, according to the airline’s last market update in late November 2022.