Embattled Qantas in major alliance with Emirates

Struggling Australian carrier Qantas on Thursday announced a major global alliance with Emirates that will see its hub for European flights shift to Dubai from Singapore in a bid to stem losses. The 10-year tie-up, described as a "momentous day" in global aviation, is part of Qantas's drive to turn around its fortunes after last month posting its first annual loss since privatisation in 1995. The move was welcomed by the market with Qantas shares rallying nearly five percent to Aus$1.17 by early afternoon. Subject to regulatory approval, 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. 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. "This agreement represents a step-change for the aviation industry," said Qantas chief Alan Joyce. "It is far bigger than a codeshare or even a joint services agreement. This is the biggest arrangement Qantas has ever entered into with another airline. "There will be considerable benefits for the broader economy as we collaborate with industry to drive more inbound trade and tourism," he added. Under the deal, Qantas will fly daily A380 services from both 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. It will see Qantas become the only other airline operating to Terminal 3 and the new purpose-built A380 concourse at Dubai International Airport. As a consequence, Qantas flights to Singapore and Hong Kong will terminate in those countries and be rescheduled to enable more same-day connections across Asia. For Emirates customers, the alliance will open up Qantas's Australian domestic network of more than 50 destinations and nearly 5,000 flights per week. "This is a momentous day in international aviation and it's exciting to be part of," said Emirates chief Tim Clark. "The time was right to develop a long-term partnership with Qantas, the iconic Australian airline. "By establishing this partnership we are providing our passengers with additional connectivity in Australia and the region, the ability to utilise reciprocal frequent flyer benefits and access to premium lounges and travel experiences." The arrangement, which requires approval from Australian regulators, is expected to start in April 2013 and is seen as pivotal to the future of Qantas. The Australian carrier makes good money on its domestic routes but has been dragged down by its loss-making international operations. Last month, it announced a net loss of Aus$244 million (US$248 million), a half-billion-dollar reverse from a net profit of Aus$250 million in the previous 12 months. It also cancelled orders for 35 Boeing jets as high fuel costs and industrial action hammers its bottom line. Joyce said the tie-up would help repair its international operations, which have been facing intense competition. "A key objective is to make Qantas international strong and viable, and bring it back to profitability," he said. "This partnership will help us do that, while building on our strengths in Qantas domestic, Qantas Frequent Flyer and (low-cost carrier) Jetstar."