Skift Take

Never accuse Emirates' Clark of big talk and big ambitions. But many hurdles -- including partner Qantas' own ego -- stand in the way of lucrative trans-pacific routes.

Emirates, the airline with the most international traffic, said it wants to extend its alliance with Qantas Airways Ltd. across the Pacific Ocean, allowing passengers to fly around the world on Airbus SAS A380s.

The carriers have scope to link Qantas’s A380 flights into Los Angeles with routes the Gulf carrier seeks to operate from its Dubai hub, Emirates President Tim Clark said in a phone interview. The partnership won provisional approval from Australia’s antitrust regulator last month.

“If the timing is right and the two aircraft meet, with Qantas and Emirates you could go around the world with A380s,” he said yesterday. “I’m sure we could do trans-Pacific business on Qantas metal as part of this overall deal.”

Emirates would push for the alliance’s extension into trans-Pacific routes only if Qantas’s Chief Executive Officer Alan Joyce and his management back the idea, Clark said. Shares of the Sydney-based airline have risen more than 40 percent since the partnership was announced in September, as Joyce restructures operations to end overseas losses.

“I would think Qantas would have mixed emotions about that,” Peter Harbison, executive chairman of consultants CAPA Centre for Aviation, said by telephone from Sydney. “It’s a market where they are still dominant.” Routes across the Pacific are some of its most profitable, he said. “You just have to go online and check the pricing to see it.”

‘Qantas Territory’

Qantas rose 0.8 percent to A$1.59 at 12:29 p.m. in Sydney trading, while the S&P/ASX 200 index was little changed. Luke Enright, a spokesman for the airline, had no immediate comment on the proposal.

Clark said a tie-up across the Pacific Ocean was left out of the discussions for the current Emirates-Qantas alliance because “the trans-Pacific is Qantas territory.” Still, the regulator’s initial approval doesn’t prevent the carriers from exploring the option, he said.

The companies could also link their routes into Dallas, the hub for AMR Corp.’s American Airlines, Clark said. Emirates has pursued a code-share agreement with American, which hasn’t made progress as the U.S. company examines a merger proposal from U.S. Airways Group Inc. and goes through Chapter 11 bankruptcy proceedings, he said.

Qantas could also fly the Boeing Co. 787 into Dubai once it starts receiving the composite-bodied planes, he said.

Deal ‘Energizing’

With budget carrier Jetstar, Qantas has just under half of about 33,000 seats available each week on flights between Australia and the continental U.S., Canada and Hawaii, according to data from CAPA.

Its main domestic rival, Virgin Australia Holdings Ltd., has about 10,000 seats on its own aircraft and those operated by its partners, Delta Air Lines Inc. and Hawaiian Airlines Inc., the data show.

Qantas is “by far the biggest airline in the trans-Pacific market”, and the only one to operate from Australia beyond the U.S. west coast, Joyce said in an Aug. 8 speech in Sydney.

The deal between Qantas and Emirates was “energizing” regional airlines to strike new alliances, Clark said, citing a recent code-share agreement between Air New Zealand Ltd. and Cathay Pacific Airways Ltd., and Singapore Airlines Ltd.’s decision to take a 10 percent stake in Virgin Australia.

China Eastern Accord

“A lot of things started to happen, and suddenly prices are keener, product meshing is getting better and all sorts of arrangements are taking place that you wouldn’t have even thought about,” he said.

China Eastern Airlines Corp., which operates code-share arrangements on Qantas flights into mainland China through its hub in Shanghai, is also now pushing to deepen that alliance, the Australian Financial Review reported today, citing its Oceania head Kathy Zhang.

Liu Shaoyong, the Chinese carrier’s chairman, will visit Sydney this month to advance talks on the tie-up, the newspaper quoted Zhang as saying. The two airlines are setting up a Hong Kong low-cost carrier under the Jetstar brand.

Emirates is studying ways to increase the range of the aircraft to allow it to run services to Los Angeles, as well as Houston and San Francisco, Clark said, and may need as many as 30 more of the double-decker jumbos.

Under the planned accord with Qantas due to start in April, the airlines intend to coordinate pricing, sales and scheduling, as well as aligning frequent-flier programs so passengers can earn points on both carriers’ flights. Emirates will gain access to Qantas’s Australia and New Zealand network under the deal.

Qantas, which lost A$450 million ($472 million) on international operations in the year ended June, will shift its European hub to Dubai from Singapore. The carrier is also abandoning a 17-year partnership with British Airways alongside the agreement.

Editors: Vipin V. Nair and Garry Smith.


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Tags: emirates air, qantas, tim clark

Photo credit: Tim Clark, CEO of Emirates. PR photo.

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