Aviation

Qantas, Emirates alliance wins conditional approval

Australia's competition watchdog on Thursday gave its preliminary approval to a global alliance between struggling carrier Qantas and Dubai-based Emirates, but only for five years initially.

The Australian Competition and Consumer Commission (ACCC) said the benefits, which will see the airlines coordinate ticket prices and flight schedules, would likely outweigh reduced competition on certain routes.

A final decision will be made by March.

"The ACCC considers that the alliance is likely to result in material, although not substantial, benefits to Australian consumers," ACCC chairman Rod Sims said in a statement to the Australian Stock Exchange.

"The main benefit arising from the alliance is an improved product and service offering by the two airlines to their customers.

"This includes increased customer access to each others' flights, destinations and frequent flyer programmes." Sims added that the alliance, seen as pivotal to the future of Qantas, would lessen competition on some international routes, but competition from other airlines should mitigate the impact.

However, he said Qantas and Emirates could reduce or limit capacity on routes between Australia and New Zealand under the partnership, which could result in higher airfares.

It was for this reason that the ACCC only gave an initial five-year approval, half the 10 years requested by the airlines. The decision would then be reviewed.

Under the alliance, Qantas will shift its hub for European flights to Dubai from Singapore in a bid to stem losses after this year posting its first annual deficit since privatisation in 1995.

It also means an end to Qantas's partnership with British Airways on the so-called kangaroo route to London, which has spanned nearly two decades.

Once final approval is granted, Qantas will fly daily A380 services from Sydney and Melbourne to London via Dubai, meaning that between the two airlines there will be 98 weekly services between Australia and the Emirates hub.

As a consequence, Qantas flights to Singapore and Hong Kong will terminate in those cities and be rescheduled to enable more same-day connections across Asia.

For Emirates customers, the alliance opens up Qantas's Australian domestic network of more than 50 destinations and nearly 5,000 flights per week.

The deal goes beyond codesharing to include coordinated pricing, sales and scheduling and a benefit-sharing model, although neither airline will take equity in the other.

"We put a strong case to the ACCC that outlined the benefits of this partnership, both for travellers and for Australian tourism, " Qantas chief Alan Joyce said.

AFP

Pegasus Airlines unveils deal for 100 Airbus planes

Turkish carrier Pegasus Airlines said Tuesday that it has ordered up to 100 Airbus passenger jets, the biggest commercial plane deal to date by a Turkish airline and the first time that Pegasus has not placed its orders with Airbus' arch US rival Boeing.

Pegagus chairman Ali Sabanci told a press conference in Istanbul that the airline had signed a firm order for 75 planes and taken options on 25 others from the Airbus A320 series, in a deal that would carry a catalogue price of $12 billion (9.1 billion euros), though large orders are routinely signed at discounts.

The purchase involves deliveries that are to extend from 2015 through 2022 and includes Airbus A-320 Neo and bigger A-321 Neo planes, which are the latest, more fuel-efficient versions of the group's top-selling short- to medium-range aircraft.

Pegasus is thus set to become the first Turkish airline to operate the A320 neo plane, which is to be equipped with new engines and "sharklet" wing tips that provide substantial fuel savings.

Airbus chief operating officer John Leahy was quoted by a statement as saying that the new aircraft would "cut fuel burn by 15 percent" while offering the proven reliability of a model already being flown widely around the world.

Sabanci added that such savings by the Airbus airliner along with "superior cabin comfort made it without a doubt the best choice for achieving our ambitious future development plans."

Airline analyst Christophe Menard from Kepler Capital Markets commented that the order "would be another token for Airbus to demonstrate that the A320 Neo is a superior offering to the B737Max, as the Boeing plane should have been the natural successor to the current fleet."

The Airbus aircraft are to be deployed on flights from Istanbul to other Turkish cities as well as destinations in Europe and the Middle East, a Pegasus statement said.

AFP