ACCC formally approves Qantas, Emirates alliance

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Qantas and Emirates have been granted formal approval from Australia's competition regulator for their extensive international alliance.

The Australian Competition and Consumer Commission (ACCC) has given the two airlines authorisation to coordinate their international services between Australia, Asia, Europe and New Zealand from 31 March 2013 for five years. The two airlines were previously granted interim authorisation in January.

The alliance, which was announced in September last year, will see Qantas move its hub for European services to Dubai from 31 March and also codeshare on a number of Emirates' services between Australia, Europe and Asia. Similarly, Emirates will codeshare on a number of Qantas's domestic services.

"The ACCC considers that the alliance is likely to result in detriments through its effect on competition in regions where Qantas and Emirates currently offer competing air passenger and cargo transport services," says ACCC chairman Rod Sims. "However, in most of these regions, the ACCC has identified competitive constraints which mean that these detriments are likely to be minimal."

However, he adds that there were concerns that the airlines' coordination on trans-Tasman services could have a competitive impact as they account for around 65% of available capacity, and thus "have the ability and incentive to reduce or limit growth in capacity in order to raise airfares".

As a result, the ACCC has imposed a condition whereby the two carriers will have to maintain the same level of pre-alliance capacity. The regulator will also be able to conduct a later review to determine if the minimum amount of capacity needs to be increased in the future.

Qantas chief executive Alan Joyce welcomed the ACCC announcement, saying that the "future of its international business is much brighter with this partnership".

"Customers are already responding very strongly to the joint network that Qantas and Emirates have built, and to the frequent flyer benefits that extend across it, with a significant increase in bookings," he adds.