Qantas Airways of Australia has announced a partnership with Emirates of Dubai on its European routes; the Sydney-based carrier is ending a nearly 20-year partnership with British Airways in view of curbing its profit loss on international operations.
The new 10-year agreement will enable Qantas to provide its customers flights to over 70 destinations in Europe, Africa and the Middle East as its European hub moves from Singapore to Dubai. Qantas anticipates that collaborating with Emirates, the world’s largest international carrier, will facilitate its recovery from the $459 million it lost in long-haul operations for the financial year that ended in June.
Starting April 2013, pending regulatory approval, the two airlines will coordinate scheduling, pricing and sales as well as align frequent flier programs and allow reciprocal customer access to exclusive tier-status services (e.g., priority check-in and boarding; lounge access).
As Qantas customers benefit from the expansion of its international services, Emirates customers can in turn access Qantas’ thriving domestic Australian network of over 50 destinations.
Qantas’ Strategic Plan
Qantas’ newest partnership is the latest in its strategy to overhaul operations in its struggling international network.
Among Qantas’ barriers are its high airline costs in relation to a number of its rivals as well as stiff competition on international routes from Gulf-based Asian and Middle Eastern airlines, which currently provide more connections between Europe and Australia.
Its alliance with Emirates will not resolve all of these issues; however, it is a step in the right direction when it comes to improving Qantas’ European operations in particular. Further, the Emirates deal could lead to over $90 million in yearly profit, according to Sondal Bensan, analyst at BT Investment Management Ltd.
The company’s other recent efforts to boost international business include partnering with Japan Airlines earlier this year to offer an inexpensive carrier in Japan, and uniting with China Eastern Airlines to initiate a low-cost, Hong Kong-based carrier, a venture still awaiting approval.
In a cost-recovery measure, the company also shut down a large order for Boeing Co. 787 Dreamliners, collecting over $430 million in compensation and refunds.
Key Statistics – World Airline Industry (source: MarketLine)
- The international airline industry is expected to be worth more than $713 billion in 2015, increasing by around 42% over 2010.
- With a volume of over 3 billion passengers in 2015, the airline industry worldwide will exhibit an increase of slightly more than 28% compared to 2010 figures.
- The largest portion of the international airline industry is domestic, which amounts to nearly 65% of the sector’s overall volume.
- Almost 45% of the airline industry’s value worldwide comes from the Americas.
- Competition is fierce within the international airline industry because of the large number of rivals as well as the challenges airlines face in leaving the industry.