Qantas (ASX: QAN) has announced that the Australian Competition and Consumer Commission (ACCC) has decided to grant authorisation, subject to a condition, for an alliance between Qantas Airways Limited and Emirates until 31 March 2018.
The alliance will involve coordination of the airlines’ passenger and cargo transport operations and other related services.
“The ACCC considers that the alliance is likely to result in public benefits through enhanced products and service offerings by the airlines, and improved operating efficiency,” ACCC Chairman Rod Sims said.
“In particular, the alliance is likely to provide Qantas and Emirates customers with increased access to a large number of existing frequencies and destinations under a single airline code, improved connectivity and scheduling, and access to each alliance partner’s frequent flyer programs. The alliance is also likely to provide the airlines with increased flexibility to manage their fleet.”
“Taking all of this together, the ACCC is satisfied that the alliance is likely to result in material, but not substantial, public benefits.
“The ACCC considers that the alliance is likely to result in detriments through its effect on competition in regions where Qantas and Emirates currently offer competing air passenger and cargo transport services. However, in most of these regions, the ACCC has identified competitive constraints which mean that these detriments are likely to be minimal.
“The one exception is the trans-Tasman where Qantas and Emirates compete on four routes which accounted for around 65% of total passenger capacity between Australia and New Zealand in the year to 30 June 2012. On these routes, the ACCC is concerned that Qantas and Emirates will have the ability and incentive to reduce or limit growth in capacity in order to raise airfares.”
Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.