Australian Qantas chooses Emirates over Etihad

Australian Qantas chooses Emirates over Etihad
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Published August 13th, 2013 - 13:33 GMT via

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Qantas and Emirates' A380's to fly over Emirates and Australia (Getty images).
Qantas and Emirates' A380's to fly over Emirates and Australia (Getty images).
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Qantas CEO Alan Joyce claimed the Australian carrier rejected a partnership bid from Abu Dhabi’s Etihad Airways before agreeing a deal with its Dubai rival Emirates Airlines.

Speaking at a press conference in Sydney, Joyce said “the jury is out on equity partnerships” of the kind that Etihad Airways is building and he claimed Qantas had been approached for a possible deal with the UAE national carrier, before ultimately agreeing a partnership deal with Dubai’s Emirates Airlines.

In a controversial comment, Joyce said the proposal by Etihad was “like being offered the bike before the BMW”.

Gulf carriers have focused their interests on the Australian market, with Etihad signing up Virgin Australia as one of its major equity partners. However, both parties are still yet to see any major positive results from the partnerships.

This summer, Qantas was forced to defend the poor start to its alliance with Dubai-based carrier Emirates after its international passenger numbers fell 7.2 percent.

The groundbreaking tie-up kicked off on March 31 amid claims it would provide customers with the best network coverage and access to lounges and frequent flyer programmes.

But in the first month, Qantas International carried 463,000 passengers compared to 496,000 in April last year. Its load factor, a key indicator of the airline’s profitability, also fell from 82.1 percent to 77.8 percent.

In a statement to Arabian Business, a Qantas spokesperson said the downturn was not surprising because there was some uncertainty surrounding the alliance, which was only confirmed on March 27 when the Australian Competition and Consumer Commission granted approval.

“Many of our international customers book their international travel several months in advance so it is no surprise that this uncertainty had an effect on forward bookings for the month of April,” the spokesperson said.

“Additionally, the withdrawal of Qantas Frankfurt service and changes to the Asian network as a result of re-routing Qantas services to the UK via Dubai instead of Singapore, Hong Kong and Bangkok also adversely impacted sales.”

At the same time, Etihad’s equity partner Virgin Australia has forecast it will make a loss of up to AUD$110m (US$98m) for the full year 2013.

The airline blamed the difficult economy, competition, restructuring costs and the carbon tax for the loss.

“Aviation’s a tough game,” Virgin Australia chief executive John Borghetti told Bloomberg. “Leisure, in particular, needed a lot of stimulating to get people to put their hands in their pocket,” he added, putting the blame on the weak economic climate.

The extra costs include moving to the Sabre ticketing system, which Bloomberg said will total AUD$100m, including AUD$36m already announced at its first-half results in February.

Despite Virgin’s forecast and Joyce’s comments, Etihad CEO James Hogan said Australia was a "key and long-term market for the airline".

He said the airline plans to launch its Airbus A380 aircraft to Sydney and Melbourne while it also plans to build premium lounges at Sydney and Melbourne Airports from 2014.

He added that additional flights would be added to Melbourne and Brisbane while nonstop flights between Perth and Abu Dhabi will also be launched.

Hogan also reaffirmed that Etihad Airways was already moving to increase its equity in Virgin Australia, following recent approval by the Foreign Investment Review Board to increase from a 10 percent shareholding to 19.9 percent.

"Virgin Australia is a key member of our ever-expanding airline equity alliance, and Etihad Airways is an active and long-term investor in Virgin," Hogan said.

"We have a significant presence in Australia, with 28 weekly departures, annual expenditure of over $100 million, direct employment of 106 staff and engagement of 415 local contractors," he added.


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