Emirates' Domination Continues After Taking Qantas Partnership From British Airways

Can BA Afford To Fly Solo To Australia?

Rising aviation superpower Emirates has secured a new partnership with struggling airline Qantas, following the termination of a 17-year deal with British Airways' owner.

International Airlines Group, which owns BA, is now believed to be in talks with a number of airlines about alternative options.

The deal, which saw BA and Qantas share revenue and costs on all services between the UK and Australia, will end in March 2013.

IAG also confirmed the split would have no impact on its profit figures, hinting that the partnership had not been that profitable in the first place.

If BA does not continue its flights to Australia, it will lose its status as the only European based carrier to travel all the way to Australia (Sydney via Bangkok and Singapore) according to a Mintel report published in June 2011.

The same report found Emirates had stormed to the top of the rankings for the highest number of passenger kilometres.

In terms of passenger numbers, BA also ranked lower in a 2012 report from Mintel, being placed sixth with 26,320 compared to Emirates' fifth place with 30,848.

Douglas McNeill, analyst at Charles Stanley, told The Huffington Post UK, that IAG could opt to fly the route on its own, although there would be question marks over whether it could offer competitive pricing by going it alone, particularly given Emirates' impressive costs.

Emirates, he said, will benefit from the new Qantas deal by getting more "feed" out of Australia - a travel market which has held up well in the global recession - as it won't have to compete against Qantas directly anymore.

"This deal confirms Emirates is an even more formidable competitor - and it will only continue to gain a greater market share," McNeill told HuffPost UK.

"This is an ominous sign for the future for other airline carriers."

Emirates' success in the UK was driven by cheaper operating and infrastructure costs by being based in Dubai and through operating out of a number of the UK's major international airports outside of London.

IAG chief executive Willie Walsh said in a statement this morning that the deal with Qantas had ended amicably, claiming the move fitted with BA's overall global strategy.

"Asia has become a key market focus for IAG and we're talking to a number of airlines about alternative options for us," he added.

Customers due to travel after 31 March next year whose bookings may be affected by the move will be contacted by British Airways to discuss alternative travel options.

Analysts believe the partnership with Emirates could generate an earnings uplift of A$80m-A$90m for Qantas.

As part of the deal, Qantas plans to launch daily A380 services from both Sydney and Melbourne to London via Dubai. Overall the two airlines will offer 98 weekly services between Australia and Dubai.

Qantas will not cede any of its valuable slots at London’s Heathrow airports to its new partner, but it will stop services to Frankfurt.


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