Qantas and Emirates Partnership Renewed: What it Means for Customers and Competition

Qantas and Emirates have been given the green light by the Australian Competition and Consumer Commission (ACCC) to continue their partnership. The authorization was first granted over a decade ago and was renewed in 2018, with the latest decision extending the partnership for another five years. The ACCC has proposed a draft determination that the partnership can continue, with the condition that the Sydney-Christchurch route is monitored to ensure competition is not harmed. Interested parties have until July 12th to make submissions before the ACCC makes its final decision.

Benefits to the Public Outweigh Anti-Competitive Detriment

The partnership between the two airlines involves coordination of activities across their respective networks, including services, pricing, and capacity. Without the ACCC determination, this coordination could raise concerns under Australian competition law. However, the ACCC argues that the greater public good that flows from the coordination outweighs the anti-competitive detriment. ACCC Commissioner Anna Brakey stated that the coordination would result in increased connectivity, convenience and greater loyalty program benefits for consumers.

Qantas and Emirates — Image by ***Andrew Lesty***

Concerns Over the Sydney-Christchurch Route

The only concern raised by the ACCC relates to the Sydney-Christchurch route, where the only competitor is Air New Zealand. The ACCC believes that conduct on this route could enhance the applicants’ ability or incentive to unilaterally increase prices or reduce services, resulting in a public detriment. The ACCC has included a condition in the draft approval requiring Qantas and Emirates to provide the commission with information so it can monitor the competitive dynamics on this route during the authorization’s term.

Benefits to Qantas and Emirates

In their renewal application, Qantas and Emirates stated that the partnership is an important strategic imperative that enables both airlines to leverage each other’s network strengths to deliver a premium customer service while also growing sustainably as demand returns post-pandemic. The networks cover routes between Australia and the UK/Europe, New Zealand, Asia, the Middle East, and North Africa. The conduct allowed under the partnership covers cost reduction activities and allows Qantas and Emirates to set prices and capacity.

Do Customers Benefit?

Qantas and Emirates have proposed to cooperate on a wide range of activities, including planning, scheduling, operating, capacity, sales, marketing, advertising, promotion, distribution strategies, reservations priority, and pricing. While customers benefit from increased connectivity and loyalty program benefits, some may question whether the partnership is in their best interest if it allows Qantas and Emirates to set prices and capacity as they see fit.

The Australian regulator’s decision to allow Qantas and Emirates to continue their partnership for another five years is a win for the airlines. While the partnership benefits customers in terms of increased connectivity and loyalty program benefits, the question remains whether the partnership’s conduct, which allows the airlines to set prices and capacity, is in the customers’ best interest. The ACCC’s draft determination includes a condition to monitor the Sydney-Christchurch route to ensure that competition is not harmed.