Australian flag carrier Qantas plans to extend its partnership with the Middle Eastern Emirates for an additional five years, pending authorization from the Australian Competition and Consumer Commission (ACCC). The two airlines want to continue coordinating pricing, schedules, sales and tourism plans, and codeshares.

“It will save a lot of money, because it won’t have to compete with Emirates,” said Peter Harbison, Australia’s Center for Aviation chairman. “The best way is to join them”

Qantas expects that the new agreement will result in “net benefits of more than $80 million a year from 2019”.

At a meeting in Sydney, leaders from both airlines agreed that the first five years of their already-existing agreement had lived up to the promise of serving customers better together.

“The first five years of the Qantas-Emirates alliance has been a great success. Emirates has given Qantas customers an unbeatable network into Europe that is still growing. We want to keep leveraging this strength and offer additional travel options on Qantas, particularly through Asia,” said Qantas Group CEO Alan Joyce.

As part of the new deal, Qantas will hand all of its flights between Australia and Dubai over to Emirates in a codeshare. What does this mean for travelers?

Most notably, passengers on the famous Qantas Kangaroo Route, which flies between Sydney and London, will no longer stop in Dubai. Instead, all Qantas planes on the route will stop at Changi Airport in Singapore for their technical stop. This will remove the last of its flight from the airport, which is Emirates’ hub. In addition, all remaining A330s on the Sydney-London route will be replaced by A380s.

Qantas says that the reroute is in “response to growing demand in Asia”. The decision is a reversal of a 2012 decision in which Qantas moved the Sydney-London connection from Singapore to Dubai under its original agreement with Emirates.

“Our partnership [with Emirates] has evolved to a point where Qantas no longer needs to fly its own aircraft through Dubai, and that means we can redirect some of our A380 flying into Singapore and meet the strong demand we’re seeing in Asia,” said Joyce.

Qantas also has plans to reroute its Melbourne-Dubai-London flights with Melbourn-Perth-London service. Daily Qantas Melbourne-Singapore flights will upgraded from an A330 to an A380, and will increase from 10 flights weekly to 14.

A Qantas A330 in One World livery. Qantas is taking the A330 off of its Melbourne-London route, replacing it with extra A380 service.
Photo Source: Australian Aviation

In total, Qantas is adding 11 weekly services and 7,194 one way seats to Australia and London from Singapore. This brings its Changi service to 49 weekly flights and 17,600 one-way seats.

“This development secures Changi Airport as the most connected international airport to Australia, both in terms of the number of city links and seats, and strengthens our position as the region’s leading air hub,” said Kim Ching Kiat, Changi Airport Group managing director.

These changes will take effect on March 25, 2018. Analysts say that the move will regain some of the capacity lost on the Singapore-London route when the carrier moved its European hub to Dubai five years ago.

“When Qantas launches its Singapore-London services, it will be the third largest carrier by seats on the route, behind Singapore Airlines and British Airways,” said Ellis Taylor, Asia Finance Editor for FlightGlobal magazine. “By comparison, when it exited it in 2012, it was the second largest.”

Qantas says that its decisions both five years ago and now are based on market fluctuations. “We don’t want to sit still while traffic flows, technology, and consumer preference shift around us.”

These extra flight could put too much extra weight on Singapore Airlines (SIA), who has a hub at Changi. It currently derives around 15% of its system-wide revenue from the south-west Pacific, says Eugene Chua, an OCBC analyst.

Qantas’ shift to Singapore as a tech stop can increase competition in the area, putting pressure on carriers such as Singapore Airlines.
Photo Source: Air Cargo Week

“We believe Sydney-Singapore-London remains a significant route for SIA, and with Qantas shifting its transit point for its daily Sydney-London flight to Singapore, couple with the increase in Melbourne-Singapore service next year, competition is set to increase for SIA,” said Chua. “While it remains early to determine the impact, we believe the result will likely be greater yield pressure for SIA on these routes.”

However, SIA said in a statement that “competition is not new in this industry”, and that it will continue to compete on innovation, connectivity, and service standards.

“SIA Group Airlines have been increasing capacity into and out of Australia in recent years to meet growing demand,” Singapore Airlines said in a statement. “We will continue to look for opportunities to boost capacity in line with our long-term commitment to growing the Singapore hub.”

Joyce says that Dubai will remain an important hub for Qantas customers, and more than eight million passengers have travelled on the Qantas-Emirates network since 2013. He says that the Emirates codeshare gives customers access to more than 40 cities not served by Qantas.

Qantas passengers fly Emirates from Australia to Dubai once Qantas leaves the region via the agreement between the two carriers.
Photo Source: TEAM Aero

“Improvements in aircraft technology mean the Qantas network will eventually feature a handful of direct routes between Australia and Europe, but this will never overtake the sheer number of destinations served by Emirates,” said Joyce.

This new reroute may be temporary, though. Qantas recently announced plans to fly from Sydney to London non-stop. You can read more about that by clicking here.

Categories: Industry Talk