Why is Qantas in discussion with Emirates? Their talks about much more than codeshares….read on to find out why!
With Qantas confirming today that it is in talks with several airlines, including Emirates, reportedly regarding a potential alliance, I can’t imagine anyone would be surprised.
I can also tell you, that I was told at ATE, from a very reliable source within the Australian aviation industry and one very close indeed to Qantas, that a number of senior management from Qantas were in Dubai right at that very time, negotiating with Emirates and it was not only codeshares they were negotiating, but a much bigger deal was on the table.
With Qantas saying today that making alliance partnerships stronger was one of the four pillars of the group’s five-year strategy announced in August 2011, the flying kangaroo added, “At any one time, Qantas may be in contact with a wide range of companies about potential commercial cooperation,” and, “These airlines include Emirates, among others,” adding not unsurprisingly that it would not comment on the nature or status of the talks.
Of course they wouldn’t comment and who would blame them, because Qantas is the carrier in the position of weakness in any negotiations and while Qantas domestic business is doing OK, it is facing stiff and increasing competition from Virgin Australia, while Qantas’ international business is a disaster.
So, may I suggest that you take a few seconds to ask yourself……why would Emirates, one of the most successful and profitable airlines in the world, with several flights daily to ports right across Australia, that Qantas also operates to and from, want to bother entering into codeshare agreements with Qantas?
The bottom line in all this is that codeshares on both airlines’ international and domestic services are of course part of a deal, but I stress only part of it.
The real deal being negotiated between them is Emirates buying into Qantas domestic, with some of the terms of that deal including codeshares on domestic Qantas services and on both Qantas and Emirates international services.
While Emirates CEO Tim Clark last month categorically ruled out Emirates taking an equity stake in Qantas, industry analysts say that was intended to put the media off the scent, as is the current speculation of codeshare agreements, that make no commercial sense on their own
So what do industry analysts think is on the table?
1. That Emirates is negotiation to buy a substantial % of Qantas domestic;
2. One of the conditions is that Emirates codeshares on Qantas’ domestic routes and that Qantas and Emirates codeshare on international routes.
3. Finally……and this is the big one…..Qantas will abandon the traditional kangaroo route or at least dramatically reduce it services, with in the meantime, Qantas aircraft flying to Europe via Dubai, using Dubai as hub, with onward travel by Emirates, to its well over 100 ports around the world and especially the ports in Europe.
This makes huge commercial sense for Qantas, potentially eradiating for Qantas the losses it makes on the haemorrhaging Kangaroo route.
Some might say that Qantas will never give up the kangaroo route, but the world of aviation at Qantas HQ in Mascot is very different to that of the past, with nothing sacred, secure or cast in stone.
Industry Insider Commentary and Opinion by John Alwyn-Jones, Global Travel Media Special Correspondent
