Some trans-Tasman impact from Qantas deal

ROELAND VAN DEN BERGH
Last updated 13:35 06/09/2012

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Qantas and Emirates have signed a 10-year global partnership that will see the two carriers work together on all flights between Australia and Europe as well as to New Zealand.

Under the agreement the two airlines will also "co-ordinate" their trans-Tasman services to and from Auckland and Christchurch.

Qantas says its trans-Tasman services will not be affected by the agreement.

However, Dubai-based Emirates - which flies to Auckland as well as to Christchurch - will change its schedules, including the introduction of a giant Airbus A380 on the Auckland to Melbourne route in October.

No details of schedule changes were available. The agreement requires regulatory approval in Australia and is expected to take effect in April next year.

Qantas will also move its hub for European flights from Singapore to Dubai, and has cancelled its long-standing joint services agreement with British Airways for flights to London.

Together Qantas and Emirates will fly 98 times a week between Australia and Dubai with onward flights to Europe, including seven daily flights to London.

Emirates will also gain access to Qantas' domestic network of more than 50 destinations.

Frequent flyers will be able to earn and redeem loyalty points on both airlines.

Qantas chief executive Alan Joyce said the partnership would strengthen Qantas' international business, which is suffering heavy losses.

Macquarie Equities' transport analyst, Russell Shaw, has estimated the value to Qantas of a code-share alliance with at as much as A$90 million ($115 million) a year in pre-tax earnings. 

He described a tie-up with Emirates as the "missing piece in the earnings bridge" for Qantas in helping to turn around its premium international operations, which lost A$450m in the year to June. 

Despite the prospects of a deal with Emirates, Shaw said Qantas still faced challenges in the medium term in improving its network in Asia to help it to compete against Cathay Pacific and Singapore Airlines.

Qantas also faces a short-term hit to its earnings in the domestic market in the current financial year as it seeks to repel the challenge of Virgin Australia. The latter is seeking to grab a bigger share of the lucrative corporate travel, which Qantas has dominated since Ansett's collapse in 2001.

It is not the first time Qantas has courted a relationship with the Middle Eastern airline, which is renowned for its desire to go it alone. Qantas did form a code-share agreement with Emirates in the 1990s but abandoned it a short time later.

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