Qantas-Emirates alliance to stay Australian only

Last updated 14:36 18/01/2013

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Australia's competition watchdog has given interim approval for an alliance between Qantas and Emirates airlines but has prohibited them from extending it to trans-Tasman routes because it may push airfares up.

The Australian Competition and Consumer Commission (ACCC) said the interim authorisation allowed the airlines to carry out preparatory work before a final decision on authorisation is given in coming months.

The proposed alliance is due to begin in April and would include collaboration on joint sales and pricing strategy, joint marketing, system integration and testing, customer handling, and scheduling and capacity coordination.

The ACCC determined that the public benefits resulting from the alliance were likely to outweigh the public detriment in a loss of competition.

However the watchdog specifically excluded flights between Australia and New Zealand from the alliance because the pair's only major competition on that route is from Air 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," said ACCC chairman Rod Sims.

"Therefore the ACCC is granting interim authorisation on the condition that the applicants do not engage in the conduct for which authorisation is sought in relation to services between Australia and New Zealand."

Qantas chief executive Alan Joyce said the decision on trans-Tasman reflected the fact that New Zealand law does not provide for interim authorisation.

New Zealand's Commerce Commission said it did not have an opinion on the alliance because it was an "arrangement" between the airlines and not a "merger" of businesses.

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