Qantas Airways and Emirates have welcomed a draft decision from Australia's competition watchdog that approves their proposed alliance.
The Australian Competition and Consumer Commission (ACCC) has issued a draft ruling that proposes to grant authorisation to the two airlines for their plan to coordinate passenger and freight operations across their networks.
"The ACCC considers that the alliance is likely to result in material, although not substantial, benefits to Australian consumers," says ACCC chairman Rod Sims.
However, the ACCC will require the two carriers to maintain a base level of capacity on trans-Tasman routes between Australia and New Zealand, which may be increased by a "specified growth factor" to prevent them from manipulating capacity and fares.
Qantas had previously said that it would be open to entering into a formal commitment not to reduce trans-Tasman capacity to win approval for the alliance.
The ACCC may grant only a five-year authorisation rather than the 10 years that the airlines sought in their application. It is accepting public submissions before issuing a final determination in March 2013, a month before the alliance commences.
Qantas chief executive Alan Joyce welcomed the announcement, noting that the airline had put a "strong case" to the authority that it would benefit travellers and Australia's tourism industry.
"We will now focus on responding to the issue raised by the ACCC in relation to the trans-Tasman as we move to securing final approval of this landmark partnership," he says.
Emirates president Tim Clark added that his carrier's customers have responded positively to the proposed announcement.
"The feedback since the Emirates and Qantas partnership was announced has been positive and reinforces what a strong match the two brands are for each other," he says.
The two airlines will implement the alliance from April 2013. Qantas will move its hub for European services from Singapore to Dubai and both carriers will enter an extensive codeshare arrangement across each others' networks.
Qantas says it has already been working with Emirates to join their respective loyalty programmes, connecting IT systems and establishing an operational base in Dubai.
Qantas and Emirates announced the proposed partnership on 6 September 2012.