INTERNATIONAL BUSINESS NEWS
September 06, 2012 12:00:00 AM
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Struggling Australian carrier Qantas on Thursday announced a major global alliance with Emirates that will involve moving its hub for European flights to Dubai from Singapore.

The 10-year tie-up, described as a "momentous day" in global aviation, is part of Qantas's drive to turn around its fortunes after posting its first annual loss since privatisation in 1995 last month.

Subject to regulatory approval, it goes beyond codesharing to include coordinated pricing, sales and scheduling and a benefit-sharing model, although neither airline will take equity in the other.

The alliance prompted Qantas and International Airlines Group, which includes British Airways, to terminate their partnership which has spanned nearly two decades.

"This agreement represents a step-change for the aviation industry," said Qantas chief Alan Joyce.

"It is far bigger than a codeshare. Or even a joint services agreement. This is the biggest arrangement Qantas has ever entered into with another airline.

"There will be considerable benefits for the broader economy as we collaborate with industry to drive more inbound trade and tourism," he added.

Under the deal, Qantas will fly daily A380 services from both Sydney and Melbourne to London via Dubai. Between the two airlines there will be 98 weekly services between Australia and Dubai.

It also means Qantas will be the only other airline operating to Terminal 3 and the new purpose-built A380 concourse at Dubai International Airport.

The carriers will also coordinate their services between Australia and New Zealand and between Australia and Southeast Asia.

For Emirates customers, it will open up Qantas's Australian domestic network of more than 50 destinations and nearly 5,000 flights per week.

"This is a momentous day in international aviation and exciting to be part of," said Emirates chief Tim Clark.

"The time was right to develop a long-term partnership with Qantas, the iconic Australian airline.

"By establishing this partnership we are providing our passengers with additional connectivity in Australia and the region, the ability to utilise reciprocal frequent flyer benefits and access to premium lounges and travel experiences."

The arrangement, which requires approval from Australian regulators, is expected to start in April 2013 and is seen as pivotal to the future of Qantas.

The Australian carrier makes good money on its domestic routes but has been dragged down by its loss-making international operations.

Last month, it announced a net loss of Aus$244 million (US$248 million), a half-billion-dollar reverse from a net profit of Aus$250 million in the previous 12 months.

It also cancelled orders for 35 Boeing jets as high fuel costs and industrial action hammered its bottom line.

AFP

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