Qantas and Emirates Tie-up

[AJ]

Qantas and Emirates announced a 10 year codeshare deal today, the key points:
- Qantas to pull out of Frankfurt
- Qantas services to London to route via Dubai
http://www.qantas.com.au/travel/airl...irates:lang:en

[IberiaMD-87]

Hm... good luck to them. It sounds like "going to bed with my former rival"?

Regards

[AA 1818]

This may (in-time) prove to be not so much so, but at present, the move seems both idiotic and desperate.

Why team up with EK, when you could just as easily strengthen your positions within OneWorld via greater code-sharing within the alliance. With MAS, CX, BA, and AB - all of the gains that can be made by this EK partnership, could have been achieved, and to much greater degrees.

They are being asked to give up Frankfurt. Had they given AB the chance, they would have seen their services return to profitability and solidly back AB where it is at its strongest (the German domestic, and Intra-European markets), all the while enjoying a more cooperative partner than EK would have ever been.

This is exactly the major qualm with OneWorld. Half the time, partners get so closely alligned (BA and AA come to mind) that they chafe their relationships with others to maintain that level of 'friendship', or exactly the opposite happens; where members of the same alliance are so much so estranged that they make moves that will only effect competition between them.

As for QF, best of luck with this move, because they are going to need it.

[Eric Diffoot]

Reminds me of the quote..."keep your friends close, but keep your enemies closer". Good luck to Qantas but something tells me this was a desperate move to improve the bottom line quicker. It does seem Qantas had to do something quickly, but with Air Berlin still in limbo, and Qatar not in the alliance yet, not much on their table. With the possibility of Qatar joining Oneworld in a year, Doha would have been that hub that Dubai is, but of course Dubai Intl and Emirates are well established and large already and Doha Intl and Qatar are still growing. I wonder how this current partnership may come into play, if it does at all.

[Foxtrot]

I wonder why QF was asked to drop FRA. EK though already has a strong Australia network and this will only solidify its position on the Kangaroo route (which is now shuffled?).

As for QF, it's more like "if you can't beat 'em, join 'em."

[tsv]

Originally Posted by AA 1818

This may (in-time) prove to be not so much so, but at present, the move seems both idiotic and desperate.

Why team up with EK, when you could just as easily strengthen your positions within OneWorld via greater code-sharing within the alliance. With MAS, CX, BA, and AB - all of the gains that can be made by this EK partnership, could have been achieved, and to much greater degrees.

They are being asked to give up Frankfurt. Had they given AB the chance, they would have seen their services return to profitability and solidly back AB where it is at its strongest (the German domestic, and Intra-European markets), all the while enjoying a more cooperative partner than EK would have ever been.

This is exactly the major qualm with OneWorld. Half the time, partners get so closely alligned (BA and AA come to mind) that they chafe their relationships with others to maintain that level of 'friendship', or exactly the opposite happens; where members of the same alliance are so much so estranged that they make moves that will only effect competition between them.

As for QF, best of luck with this move, because they are going to need it.

Firstly you really need to check out some route maps Mate. EK can connect more Australian-European City Pairs with one stop than all of the OW carriers put together. Plus a heap of Middle East and African destinations. They might even pick up a bit of traffic to Pakistan, India and North America.

Secondly they have a product that the likes of BA/MH/AB can only dream of - try taking a Shower on one of their A/C!

Thirdly they have capacity to burn and plenty more to come. They haven't even received a third of their A380's at this stage.

Fourthly QF are not being "asked" to give up Frankfurt. It's a destination which ties up an Aircraft for a long time for each trip, has curfew issues and is either only marginally profitable or loss making. They simply don't want to keep flying there. And now they don't have to because their new Partner flies there rather regularly and will soon have a QF code share on all their flights there. The Aircraft can be redeployed to Asia, South America or even Domestically to much better advantage.

But QF may well return to Germany in a couple of years because EK is restricted to how many destinations they can serve there while QF is has plenty of available rights. So the opportunity will be there to open flights to destinations like BER with guaranteed high loads from EK feed. Other Countries may also limit EK rights which could lead to QF metal flying beyond DXB.

Fifthly there is no reason why OW code shares cannot contine to be used and the QF/AY code share will continue for example . When MH and UL enter OW they are likely to carry QF code shares.

Alliances always have and always will need to adjust to reflect prevaiing conditions. Anyone who has watched the TV program "Survivor" will understand this. I don't see this as a sign of weakness within One World - to the contrary the fact that Members have the courage and flexibility to enter into such a relationship with an Airline outside the Alliance is really a sign of strength.

That is not to say the deal is completely without risk. It maybe that one Partner may gain a lot more from it than the other which could lead to tension. If the agreement was torn up at the end of 10 years for example it could leave QF in a pretty nasty spot.

[CathayPacific]

This is a total capitulation for QANTAS.

The problem is that Emirates actually does not have anything to gain in this on the surface. It already has the market. It doesn't need QANTAS to improve its access to Australia and NZ. Now it can use this opportunity to squeeze QANTAS out slowly without QANTAS even knowing it. If QANTAS really wants to tie up with a Middle East carrier that will not end in a one-sided "you need me but I don't need you" relationship, it should go with Qatar, which offers quality service, even better coverage to Europe (in terms of number of destinations, not frequency), but doesn't have a lot of flights to Australia. That would be a threatening prospect for EK.

I am not sure the strategy to re-focus to Asia would work. At the end of the day, QANTAS international operation's cost is too high competing with Asian carriers. For pax connecting from Australia to Asia, what is the up-side of choosing QF over CX or SQ or TG? These Asian carriers offer better or comparable services, lower price, higher frequency between their hubs and Australia, and more destinations to connect within Asia.

QANTAS is probably done internationally. May be the only remaining viable route is SYD-LAX. Leave the other international routes to JetStar.

[tsv]

Sounds like someone at Cathay Pacific just woke and realised they are going to lose a bunch of Passengers.

Getting Codeshare access to about 50 new destinations one-stop is NOT capitulation. And there will be opportunities to increase frequencies between Australia and Dubai on their own Metal (because EK is already has reached the number of allocated flights from some Cities including SYD). There will also be opportunities ahead for QF to fly beyond DXB into Europe as Tim Clark noted in his press conference and there is a good chance that will happen.

EK gets access to all QF's frequent flyers (reportedly about half of all Australian Households) and a swag of Business and Government contracts. So although there certainly is a risk EK may want to dissolve the partnership at some stage I don't that risk is all that high. Given the benefits QF get from this deal it is a risk worth taking.

QR would also been a good partner but there are risks in teaming up with them as well. For one I am not convinced that 3 Mega Hubs all located within a stone's throw of each other basically trying to do the same thing is going to be viable for the long term. There were 4 when Gulf Air was trying to get in on the act and had flights from Bahrain to all sorts of places. Gulf Air has already given up on that and there may well come a day when one of the others has to as well. If so EK is probably the least likely of the 3 to go because they were the Pioneers of the idea so have the biggest network in place. Secondly how stable is the Political scene in Qatar?

With regard to the market between Australia and Europe/Africa/Middle East the QF/EK partnership is going to absolutely cream the offerings of the likes of SQ/TG/CX/CZ in terms of number of destinations, flight frequency and domestic connections within Australia. Therefore they are going to take plenty of traffic from those carriers, particularly Business Traffic.

I do think you have a valid point about QF's cost base being too high to compete effectively in Asia. I don't have access to the Airline's Cost base data but I can well imagine that QF would be one of the highest in the Region. I wouldn't have thought CX has a particularly low cost base either but it is easy to imagine the quickly expanding CZ does. It will be interesting to see if QF can make any headway in Asia. The earlier flights will help but what they really need is some more destinations including more flights which don't originate in SYD.

Regardless of what happens in Asia and Europe they do have a few more routes other than LAX which I think will be around for many years; SCL, DFW, JNB and the NZ Cities.

[Peter Kesternich]

Another major move in Emirates' attempt to control the market from Europe to Asia and Australia. Qantas quite obviously waved the white flag and Emirates were clever enough to accept their surrender rather than push them out of business on the Europe-Asia-Australia routes. Now, Emirates can appear to be the savior for Australian travellers rather than get painted as the bad guys.

Mark my words: anyone who flies Emirates (or any other Gulf carrier) helps seal the fate of their local airline in Europe. I believe in Australia it's already sealed.

[SAMRPICS]

Quite frankly i dont consider BA my local airline as they haven't given a stuff about the north for years. I would sooner fly with any other carrier if i didnt have to go through Heathrow to use them. I do however agree that Qantas has already lost the battle for longhaul customers to Europe and most of Asia.
As someone who has flown with Emirates i must say its a fantastic airline to fly with and the break in Dubai helped me not to feel as tired at the end of my trip.

Going slightly off topic do you think Etihad and Air France's recent codeshare dealings will now come into play on the Australian flights because i suspect this could well be the case.